Markets Live: Stocks squeeze out a rise – Sydney Morning Herald

4:34pm: The banks had a particularly strong day as investors continued their chase of yield. CBA was the weakest of the big four, but still managed to rise 0.3 per cent to a new closing high of $73.86. Earlier, the stock had hit an all-time high of $74.19.

ANZ rose 0.8 per cent, NAB added 0.5 per cent and Westpac jumped 1.1 per cent.

Supermarkets Woolies and Wesfarmers both rose 0.5 per cent, while Telstra ended unchanged.

BHP and Rio fell 0.15 per cent and 0.2 per cent respectively.

4:28pm: Japanese stocks were hammered today, with both the Nikkei and the broader Topix diving 3.3 per cent, as the stronger yen hurt exporters.

‘‘The yen’s rise is weighing on Japanese shares as they are increasingly sensitive to the currency’s move,’’ says Masaaki Yamaguchi, an equity market strategist at Nomura. On earnings, ‘‘very few companies will upgrade their outlook just three months into the fiscal year.’’

Other markets in the region are also lower, with Hong Kong down 0.6 per cent, Shanghai off 1.7 per cent and Singapore losing 0.1 per cent. In fact, the local market is the only one in the region that has posted a gain.

Meanwhile,  European shares are set to edge higher in early trading, with investors betting major central banks will offer reassurance that their monetary policies will remain accommodative for the foreseeable future.

Futures for Euro STOXX 50, Britain’s FTSE 100, Germany’s DAX and France’s CAC are 0.2 to 0.3 per cent higher.

Wall Street futures are down about 0.2 per cent.

4:18pm: The stock market has closed, eking out a small gain. The benchmark S&P/ASX200 index added 4.3 points, or 0.1 per cent, to 5046.3, while the broader All Ords rose 4.1 points, or 0.1 per cent, to 5027.9.

Losses in materials (down 0.4 per cent) and energy (-1.1 per cent) were offset by gains in financials (up 0.5 per cent) and consumer staples (0.3 per cent).

3:49pm: Malaysian long-haul airline AirAsia X will boost its presence on routes to Australia in October when it begins four flights a week to Adelaide.

In a further challenge to Jetstar, AirAsia X will begin flights between Adelaide and Malaysia’s capital, Kuala Lumpur, on October 30. The South Australian capital will become AirAsia X’s fifth Australian destination after Sydney, Melbourne, the Gold Coast and Perth.

AirAsia X chief executive Azran Osman-Rani said the Australian market was one of the airline’s core markets and starting services to Adelaide had been a priority.

‘‘Our goal since launching our first Australian service on the Gold Coast in 2007 was to operate in the five major states, and we are proud to have accomplished this within six years,” he said.

3:41pm: The fact the ASX 200 has held up so well is positive, with financials and materials providing support, says IG’s Chris Weston.

• There have been a few interesting stock stories to focus on, with China’s Molybdenum buying an 80% stake in Rio’s Northparkes copper assets, while OZL has come out with further disappointing news for shareholders in writing down $200 to $240 million of asset value at its Prominent Hill mine.
• By all accounts OZL was also in the running for the Northparkes assets, and thus given the issues at Carapateena should have seen upside risks to its share price from the acquisition; the failure to capture this asset could be weighing as well.
• On the other side of the coin, Rio’s shareholders should welcome this (provided it goes through) as it should be seen as a compelling price and a nice boost for its balance sheet.

3:23pm: Moody’s has cut its rating on Newcrest Mining debt from Baa2 to Baa3 with a negative outlook, affecting about $2 billion worth of securities affected.

“The downgrade to Baa3 primarily reflects our expectation for weaker operating and financial metrics over the next 2 to 3 years, following a series of production disappointments, future guidance reductions and rising cash costs”, says Matthew Moore, a Moody’s vice-president, adding, “these production disappointments come at a time of increased volatility and sharp declines in gold price, which at previously elevated levels helped insulate some of the company’s past operating issues”.

Lower production levels and inflated costs combined with sharp declines in gold prices have contributed to contracting margins and weakened credit metrics to levels that are no longer consistent with the previous rating level.

“The negative outlook reflects our expectation that Newcrest’s credit metrics will continue to be challenged over the next 12 to 18 months,’’ Moody’s says.

Shares are down 1.3 per cent at $12.25.

3:13pm: Meanwhile, across the Tasman, analysts are saying that New Zealand’s Reserve Bank governor is risking undoing months of work spent talking down his country’s after becoming the first central bank chief of a major developed economy to explicitly signal tighter monetary policy.

The New Zealand dollar was trading at 80.84 US cents about 3pm today, a six-week high, after RBNZ governor Graeme Wheeler’s statement last week.

“It’s getting harder and harder to short the kiwi when you’ve got a central bank that’s talking about tightening rates,” Auckland-based Triple T Consulting analyst Sean Keane said.

Deutsche Bank currency strategist John Horner said the New Zealand dollar’s gains this month could hurt its country’s economy.

“Looking at the rate increases priced in by markets over the course of 2014, it’s looking quite excessive.”

Here in Australia, the dollar was buying 92.62 US cents about 3pm.

2:53pm: The yield chase is another reason why investors could be flooding into Commonwealth Bank stocks again, RBS Morgans senior trader Luke McElwaine said.

With expectations the cash rate could fall further from its current level of 2.75 per cent, investors were looking towards CommBank shares, which have a 4.8 per cent dividend yield, he said. NAB, for example, has a yield of 6.1 per cent but is seen as more exposed to the economy because of its business banking, Mr McElwaine added.

“It shows you the influence of the cash rate where it is versus the yield on these stocks,” Mr McElwaine said.

But Mr McElwaine said he did not expect banking stocks to keep rising as the economy continues to soften.

“If the miners have been hit, the next logical place [to be hit] is things exposed to the economy,” he said.

“One of the biggest [sectors] exposed to the economy are the banks because they are exposed to people’s jobs and those jobs are exposed to property.”

Mr McElwaine said the money going into CBA stocks were probably coming from term deposits and overseas investors returning to Australian high-yielding shares, with the local dollar currently stabilising around 92 US cents.

CBA stocks are now almost 19 per cent higher than what they were at the start of this year, and more than 13 per cent higher than in early June. They were trading at $73.95 about 2.15pm.

2:34pm: So why are CBA and other banking stocks faring so well on the Australian share market? Credit Suisse equities analyst Damien Boey says investors are making the mistake of seeing the financial sector as being mostly immune from the peak in mining investment:

• People see the resources side as getting worse and they think that banks don’t have any direct exposure to mining and so therefore, they are relatively defensive.
• They are seeing the domestic economy as holding up OK, with unemployment not getting out of hand, that the RBA could cuts rates and that the government could embark on more fiscal stimulus.
• But such perceptions are likely to be wrong. While banks have very little direct exposure to the mining sector, the loss of jobs in the sector as the resources boom peaks, coupled with a growing population and a lack of sufficient jobs being created elsewhere in the economy mean the unemployment rate is expected to rise further.
• At the same time, there is also some evidence banks are tightening their lending standards again. So even if the RBA does cut rates, there is a big question mark as to whether it will be transmitted to the broader economy in time.

Meanwhile, Japanese investors could once again start to repatriate their funds home amid weakness in their local share market.

“The last time we saw this sort of weakness in Japan, we saw yield stocks in Australia get smashed because the Japanese are major holders of Australian high-yielding companies,” Boey says.

“The Nikkei is down 1000 points in three days. I would have thought some selling is coming for our yield stocks because they are de-risking their portfolios at the moment and it’s only a matter of time before capital is repatriated again.

2:17pm: As the ACCC looks at the “excessive” docket discounting, petrol prices may have peaked, for now. According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 4.5 cents a litre to 158.0 c/l in the week to July 28.

The good news for motorists is that the wholesale price has fallen 3 cents a litre from highs and the Singapore crude price has hit four-week lows in Australian dollar terms, CommSec chief economist Craig James notes:

• The pump price could ease 3-4 cents a litre over the next 7-10 days. Petrol prices looked to have peak for now and motorists will have a few extra dollars to play with.
• It is good news for motorists and good news for businesses reliant on discretionary or non-essential consumer spending. Any retreat in the price on petrol signboards from the psychologically important level of $1.50 a litre will be appreciated by motorists.
• While petrol is at 5-year highs, it is important to note that wages have lifted 17 per cent over the five year period.

2:05pm: The competition regulator has fired a salvo across the bow of the nation’s most powerful supermarket chains, Woolworths and Coleswarns, warning that escalating petrol discounts are likely to lessen competition and hinting at legal action against the duo.

The chairman of the Australian Competition and Consumer Commission, Rod Sims, has further ignited the issue around the popular shopper docket petrol schemes, arguing in a strong speech today that if the supermarket chains wish to offer discounts to their customers it should be on supermarket purchases, not petrol.

“If Coles and Woolworths wish to offer their customers a discount, it should be off supermarket products, not petrol,” Sims said in a speech today.

Sims said his concerns have been intensified by the expansion use of shopper docket and other discounts by both Coles and Woolworths recently. ‘‘These have varied in level of discount, frequency and duration, and have now reached up to 45 cents per litre.”

“While large shopper docket discounts provide short term benefits to some consumers, the likely harm to other fuel retailers and therefore to competition and the competitive process for petrol retailing could well be substantial,” he said.

He said the ACCC’s investigation into the schemes was continuing and broadening in its direction.

“The ACCC has no power to ban shopper dockets offers. As an enforcement body, however, the ACCC can investigate market activity and, where appropriate, take court action seeking injunctions to stop the conduct and seeking penalties in appropriate cases.”

1:40pm:London copper futures have fallen to their lowest level in almost three weeks, stretching losses for a third day running on worries a slowing Chinese economy may hurt demand in the world’s top consumer of the metal. Shanghai copper fell more than 2 per cent, also hitting its weakest since early July.

‘‘We haven’t really seen a turnaround in the demand outlook for China,’’ said Helen Lau, senior metals analyst at UOB Kay Hian Securities in Hong Kong.

‘‘Near term, given the summer lull and the possibility that China’s economy will continue to slow down, I expect copper prices to be choppy,’’ said Lau, who sees copper trading between $6,700 and $7,000 in August

Three-month copper on the London Metal Exchange dropped as far as $6,820 a tonne, its lowest since July 10. LME copper fell 2.2 per cent on Friday, its steepest single-day decline since July 5.

1:32pm: The retailers have posted a mixed performance so far today. Those which are higher are well ahead of the general market:

• Woolworths: +0.45%
• Wesfarmers: +0.22%
• Harvey Norman: +0.38%
• DJs: -0.38%
• Myer: -0.19

1:29pm: A quick look now at the big miners:

• BHP: -0.51%
• Rio: -0.26%
• Fortescue: +0.14

1:21pm: CBA may be hitting all time highs, but the markets more generally could not be less inspired.

As it stands, the All Ords is 1.2 points lower to 5022.6, and the benchmark ASX200 is 1.3 points lower to 5040.7.

12:55pm:Chinese stocks fell to a three-week low after industrial companies reported slower profit growth and China began a nationwide audit of government borrowings amid concern potential bad debts may weigh down the economy.

The Shanghai Composite Index dropped 1 per cent to 1,989.99, the lowest level since July 9.

The State Council’s audit order was ‘‘urgent’’ and the office suspended other projects to work on the review, the People’s Daily reported yesterday.

Concern that loan losses will increase is extending the two-month decline in financial shares that was sparked by a cash crunch in the interbank market and economist forecasts for the weakest annual economic growth since 1990.

‘‘The audit may bring concerns to investors that local governments may have amassed a huge amount of debt, which will provide a big drag on the economy and government-led infrastructure construction,’’ said Li Jun, a strategist at Central China Securities Co. in Shanghai.

‘‘Industrial companies’ profit numbers are pretty bad. Currently, there are no positive catalysts for the market.’’

12:48pm: Still banks holding the market up – and while Westpac is rising the most (up 1.2%), there’s some focus on CBA given the stock hit an all-time high this morning at $74.19.

It’s currently trading at $74.07, still up a respectable 0.6 per cent on a day generally marked by caution.

12:39pm: The Australian dollar is slightly higher at 92.7 US cents as investors sell the greenback ahead of the Federal Reserve meeting.

Early on Thursday morning, Australian time, the US Federal Reserve will finish its two-day policy meeting. The Federal Open Markets Committee (FOMC) is expected to make an announcement on the timing of the tapering of its $US85 billion-a-month bond-buying program designed to stimulate the economy will be on the agenda.

CMC Markets chief market analyst Rick Spooner says anticipation of the FOMC announcement has been the main driver for currency markets in recent days:

• Given the recent run of economic data, there seems little risk of the Fed suggesting that it will be any more aggressive on tapering than current market expectations.
• The risk is all the other way, with potential for the Fed to emphasise that it won’t reduce its asset buying program unless unemployment continues to fall.

In recent years, the Fed’s series of bond-buying programs have put downward pressure on the US dollar and is one of the main reasons the Australian dollar has been above parity for most of the past two years.

12:25pm: Here’s why everyone’s so excited about Chinese data: Australia’s economy could see its growth cut by about 0.7 percentage points on the back of weaker growth in China, Japan’s largest brokerage Nomura says.

The Australian economy could experience any slowdown in Chinese growth through:

• direct trade
• terms-of-trade shock from lower commodity prices

In terms of direct trade, the Australian economy could shrink by about 0.3 percentage points, Nomura analyst Charles St Arnaud says. China takes in about 75 per cent of all of Australia’s iron ore exports and 23 per cent of its coal exports.

The impact of a slower China on Asia could also seen Australia’s GDP weaken by a further 0.1 percentage point.

In relation to the terms of trade, and lower commodity prices, Australia’s growth could soften by about 0.3 percentage points. This adds up to a total of about 0.7 percentage points.

Nomura is forecasting that Australia’s base case for growth next year is about 2.1 per cent, which is well below the RBA’s forecast range of 2.25 per cent to 3.25 per cent GDP growth in 2014.

A 0.7-percentage-point hit could see GDP fall even lower to about 1.4 per cent, Nomura says, the weakest growth since the financial crisis.

At the same time, a weaker Chinese economy is expected to push the Australian dollar lower, while interest rates could be slashed by a further 25 basis points on top of Nomura’s current forecast of a further easing of 50 basis points in the current easing cycle. This would thus take Nomura’s cash rate forecast down to 2 per cent.

12:11pm: The big banks are doing most of the heavy lifting today, but it’s questionable if they’ll be able to keep the market in the black.

The banks are up between 0.6 perncet (CBA) and 1.3 per cent (Westpac), contributing to a 0.6 per cent gain in the financials sector, while most other sectors are posting losses. Materials are down 0.4 per cent and energy has lost 1 per cent.

12:05pm: Chinese markets have opened sharply lower too, after industrial companies reported slower profit growth and China began a nationwide audit of government borrowings amid concern potential bad debts may weigh down the economy. Here’s how the region’s share markets are doing:

• Japan (Nikkei): -2.1%
• Hong Kong: -0.7%
• Shnaghai: -1.3%
• Taiwan: -0.4%
• Korea: -0.3%
• ASX200: flat
• Singapore: -0.3%
• New Zealand: -0.1%

11:55am: As focus turns to the Fed meeting this week, AMP’s Shane Oliver says the US central bank may consider delaying tapering its stimulus.

Oliver says the recent release of mixed economic data from major economies could result in the Fed adjusting its policy guidance to emphasise there will be no imminent tightening:

• The Fed is likely to reiterate that while it is considering tapering its monetary stimulus later this year, it is conditional on stronger economic growth and that interest rate hikes are still a long way off.
• The Fed’s assessment of recent mixed data will clearly be watched as a guide to whether the start of tapering will be delayed beyond the September meeting, which was initially the consensus favourite as to when it would begin.

Traders expect markets could be in for a bumpy ride given the flood of earnings reports in major economies and more data out of China that could renew worries about a slowdown in the world’s second-biggest economy.

But the Fed, the European Central Bank and Bank of England are all expected to maintain their pledge to keep policy loose at their respective meetings this week, a commitment that should provide a backstop for any earnings or data disappointment.

11:51am: Japan’s Nikkei has dropped bellow 14,000 for the first time in almost a month as exporters are hit by the yen’s strength against the US dollar, while caution ahead of Chinese manufacturing data and the US Federal Reserve policy statement this week is sidelining investors.

The Nikkei is down 1.8 per cent at 13,881 after hitting as low as 13,860.16, the lowest level since July 1. Toyota has dropped 2.6 per cent and is the most traded stock by turnover, while Honda has shed 2.1 per cent and Sony is down 2.2 per cent.

“A sense of caution is looming in the market, especially because investors are worried about a slowdown in the Chinese economy. And when they see a risk in Asia, they tend to buy the yen, and the Japanese market is hit by that,” says Kyoya Okazawa, head of global equities at BNP Paribas, adding that the market is bracing for weak manufacturing data in China later this week.

A weak China PMI result will only heighten fears of a hard landing for the world’s second largest economy. China is Japan’s second major export market.

In the United States, investors will scrutinise the Federal Open Market Committee policy statement this Wednesday for any additional clues about the Fed’s intended timeline for scaling back its quantitative easing. The market is also focused on jobs data to be released on Friday.

11:41am: The transition away from mining-led growth towards other sectors such as building construction is expected to be “uncomfortably slow” and a “real nail biter”, industry researcher BIS Shrapnel says in a new report.

The forecaster says total national building commencements is expected to grow at 3 per cent in the 2013-14 financial year and a further 3 per cent in 2014-15. Home construction in particular is seen as not responding to lower interest rates as was expected.

“Home building has been punching below its weight and normally low mortgage rates would be stimulating the sector toward clear recovery by now. But the antibiotics are taking longer to work this time around,” says BIS Shrapnel’s associate director Kim Hawtrey. “High household debt, concerns about the global economy, planning restrictions in some states and lack of land supply are among the factors that explain this new phenomenon.”

Housing growth is expected to be uneven across states. NSW, Queensland and WA are forecast to see an improvement in their residential construction outlooks, while Victoria and other southern states are expected to contract, the report says.

The mixed forecasts are expected to see dwelling starts fall by minus 2 per cent in 2013-14, before there is growth of 9 per cent in 2014-15 and 4 per cent in 2015-16, the report adds.

“This will be on the back of low interest rates, strong population growth and pent up demand in key states,” BIS Shrapnel says. “The lower Australian dollar – compared with recent years – will help stimulate traditional industries. The lower construction prior to 2013, as well as an expected improvement in confidence and income growth, will underpin the outlook.”

11:08am:J.P. Morgan is expecting the ASX to slide back to close the year at 4800.

Analysts Paul Brunker and Cheryl Ng said they expected the ASX to stay at that level until next June, citing resistance from weak earnings and concerns about China.

‘‘Looking further into FY14 we expect sentiment on domestic growth to weaken, and we see no early end to caution on China,’’ the pair said.

‘‘Valuations of Aussie non-commodity stocks are high relative to world markets, and we see specific multiple risks for the Banks as the labour market softens.

‘‘The China risk premium may seem elevated, but we cannot see why that will change. We think markets are developing strong immunity to stimulus measures, which are seen as deferring adjustment in the financial system and the pattern of growth.’’

Brunker and Ng said they are maintaining an underweight bias in banks.

‘‘We stick to a neutral in mining, as negative sentiment and the AUD are supportive, but we see little upside potential. In the commodity space we prefer energy.’’

11:07am: IG market analyst Chris Weston said local stocks had been weighed down by a two per cent fall on the Japanese market.

He said Japanese stocks were weaker due to concerns about the impact of the government’s efforts to revive the country’s stagnating economy.

‘‘There are some worrying trends. Their inflation numbers were all driven by energy prices and that market got hit really hard because of that,’’ he said.

Mr Weston said a soft lead from US stock on Friday had also contributed to the lacklustre start for the local shares, while China’s market would also be a key driver.

He said a national audit of Chinese debt levels, currently underway, was causing some anxiety for traders.

10:54am: If you’ve been looking for somewhere to put your silver reserves, look no further. A silver vault that can hold 200 metric tons opens in Singapore this week to cater for increasing demand for physical precious metals even as the commodity leads declines this year.

The new facility is 30 percent booked at the opening, said Joshua Rotbart, precious-metals general manager at owner Malca-Amit Global Ltd.

“Our existing vaults at the FreePort are highly secured and the rate is too expensive to store silver there,” said Rotbart, who declined to say where the new facility is sited.

“We need to find a solution, and we also see a strong demand.”

Silver is the biggest loser on the Standard & Poor’s GSCI Index of 24 raw materials this year, beating declines in corn, gold and nickel. Futures, which dropped to $US18.17 an ounce in June, the lowest since August 2010, traded at $US19.88 today. Gold has slumped 21 per cent to $US1,329.20 an ounce.

10:48am:Japanese stocks fell, with the Topix index index headed for a fourth day of losses and the longest losing streak since April 2, as the yen’s rise weighed on the earnings outlook for the nation’s exporters.

The Topix dropped 1.8 per cent to 1,145.80 in Tokyo, with all but one of the 33 industry groups retreating. The Nikkei 225 Stock Average fell 1.4 percent to 13,929.91. The Topix slid 3.7 per cent last week, snapping a five-week winning streak.

“Investors are increasing bets the US will maintain monetary easing, adding upward momentum to the yen against the dollar,’’ said Toshiyuki Kanayama, senior market analyst at Tokyo-based Monex.

“It will be hard to change last week’s downtrend in equities as long as the yen strengthens.”

10:46am: Now for the worst performed companies on the ASX50:

• WorleyParsons: -1.28%
• Origin: -1.14%
• Incitec Pivot: -1.11%
• QBE: -1.1%
• Asciano: -1%
• Toll: -0.95%

10:45am: The biggest movers on the ASX50 are showing only modest moves higher or lower. We’ll start with some of the blue chip gainers:

• Westpac: +0.98%
• Lend Lease: +0.91%
• NAB: +0.58%
• Suncorp: +0.55%
• ANZ: +0.51%
• Rio: +0.4
• CBA: +0.31%

10:40am:Gold has edged lower this morning after three weeks of gains as investors awaited a key Federal Reserve policy meeting this week for guidance on when the central bank would begin to scale back its stimulus.

Spot gold fell 0.3 per cent to $1,328.86 an ounce after a 3 per cent gain last week. US gold  gained almost $US8 to $US1,329.00.

10:36am: The US Federal Reserve is not the only central bank set to make headlines this week. The European Central Bank and the Bank of England are also expected to repeat or refine their “forward guidance” that borrowing costs will remain extraordinarily low as long as growth is sub-par and inflation is not a threat.

A batch of European sentiment indicators late tomorrow should confirm the modest improvement.

However, with unemployment forecast to have stayed at a record high of 12.2 per cent in June and inflation expected to come in below target at 1.6 per cent, ECB President Mario Draghi is likely to reiterate that interest rates will stay at present or lower levels for an extended period.

The Bank of England is also expected to remain firmly on hold – although it might issue another dovish statement – ahead of its next quarterly inflation report on August 7.

That will provide a peg for new Governor Mark Carney to spell out, as Fed chairman Ben Bernanke has done, what conditions would have to be met before the central bank dials back its bond buying and looks ahead to when record-low interest rates will start to rise.

10:26am: And here are the biggest losers on the ASX200 in opening trade:

• Evolution Mining: -5.39%
• Panaust: -3.32%
• Discovery Metals: -2.94%
• Alacer Gold: -2.91%
• Mineral Deposits: -2.73%
• Medusa Mining: -2.71%
• Fleetwood Corp: -2.62%

10:24am: Here are the best performed companies on the ASX200 in opening trade:

• Transpacific: +8.54%
• Beadell: +6.04%
• Energy World Corp: +4.35%
• Lynas Corp: +2.35%
• Transfield: +2.27%
• FKP: +2.19%
• James Hardie: +1.63%

10:19am: Sector by sector now on the ASX200, most are in the red:

• Info tech: +0.27%
• Health: +0.22%
• Energy: -0.47%
• Consumer staples: -0.31%
• Telecoms: -0.29%
• Utilities: -0.22%
• Consumer disc.: -0.21%
• Materials: -0.15%
• Financials: -flat

10:14am:That’s what you call a flat start.

In early trade, the All Ordinaries index is 4.7 points lower, or 0.1 per cent, to 5019.1 while the benchmark S&P/ASX200 is 5.9 points lower, or 0.1 per cent, to 5036.1.

10:00am: Despite a busy week of overseas economic news, in particular from the US, RBS Morgans’ director of equities Tony Dennis said he expected the local share market to remain reasonably quiet ahead of the start of the earnings season.

On the domestic calendar this week, all that is expected is several production reports from mining companies. In economic news, RBA governor Glenn Stevens will give a speech tomorrow in Sydney.

Mr Dennis said he did not expect any further major monetary policy announcements from the Federal Open Market Committee (FOMC) on Wednesday overnight, as Fed chairman Ben Bernanke had already made a series of speeches and statements recently.

“Bernanke has lit a fire and thrown water on the fire,” Mr Dennis said about the Fed’s plans to taper its stimulus program as the US economy improves.

He said the string of US economic data set to be released later this week was expected to confirm the US economy was recovering.

At the same time, he said the latest figures from China’s non-manufacturing PMI on Friday was not expected to worry the markets too much, given the central government’s recent reassurances about managing the country’s economic changes so growth remains above 7 per cent.

9:58am:Rio Tinto has agreed to sell its majority stake in a New South Wales copper and gold mine to a Chinese firm.

The mining giant will sell its 80 per cent stake in Northparkes mine, in central NSW, to China Molybdenum for $US820 million ($A892.37 million).

Rio is in the process of divesting itself of non-core asset to rein in costs.

‘‘Northparkes is a successful business but is not of sufficient size to be a good fit with our strategy,’’ Rio chief financial officer Chris Lynch said in a statement on Monday.

‘‘We believe it will have a strong future under its new ownership.’’

9:56am: In a week which will have lots of news about central banks, Australia’s own has waded into the debate about the nation’s finances.