Markets Live: Banks drive shares higher
Shares end higher after some late buying, but investors remain cautious amid political turmoil in Greece and more signs of slowing growth in China, while the dollar hovers around parity.
It’s painting a bearish picture for the Aussie. From here we’re going to see it continue to slip lower.
4.51pm: That's all for today - we'll be back tomorrow morning at 9.30am. Thanks for reading this blog.
Here's our evening wrap of today's session.
4.27pm: Meanwhile, European stock index futures are pointing to a lower start as Greece's failure to form a government heightens unease about the eurozone crisis and a move by China to ease monetary policy fuels worries the world's second largest economy was slowing.
Futures for the Euro STOXX 50, Germany's DAX and for France's CAC are 1 per cent lower.
S&P500 futures are about 0.2 per cent lower.
4.24pm: And here's a snapshot of the region's main sharemarkets:
- Japan (Nikkei): +0.2%
- Hong Kong: -0.3%
- Shanghai: +0.1%
- Taiwan: -0.3%
- South Korea: -0.2%
- Singapore: +0.3%
- New Zealand: +0.2%
4.21pm: Here's how some of the blue chips performed:
- BHP: +0.25%
- Rio: -0.1%
- CBA: +1.9%
- ANZ: +0.7%
- NAB: +1%
- Westpac: +0.8%
- Woolies: +0.7%
- Telstra: +1.1%
4.15pm: Among the sectors, financials gained 0.4 per cent, while materials slipped 0.1 per cent and energy dropped 0.4 per cent.
4.11pm: The market has closed higher after a last-minute dash. The benchmark S&P/ASX200 rose 11.9 points, or 0.3 per cent, to 4297, while the broader All Ords gained 9.2 points, or 0.2 per cent, to 4351.9.
3.59pm: And just as we mention BHP, the miner's petroleum chief executive has left the door open to the possibility of a writedown on the company's US shale gas assets, but defended their long-term value.
The company will review its assets at the end of the fiscal year on June 30, J Michael Yeager told reporters today.
"If we have to take an accounting snapshot here, we hope everybody knows that we'll take another accounting snapshot in the future and whenever those circumstances are changed, that whatever action we take now, may get reversed later on," he said.
BHP bought the Fayetteville and Petrohawk shale gas assets last year for $US17 billion all together. Shale gas prices have halved since the acquisitions.
3.54pm: The price of petrol is set to fall by up to 4 cents a litre during the next two weeks, after rising last week.
The average unleaded petrol price rose 1.2 cents to 151.4 cents a litre in the week ending May 13, according to new figures from the Australian Institute of Petroleum.
However, Commsec economist Savanth Sebastian says declines are expected within the next seven to 10 days, after a fall in price of oil across Asia. ‘‘Commsec expects pump prices to fall by around four cents over the next fortnight."
Last week, Sydney had the cheapest average unleaded petrol at 148.6 cents a litre, while Darwin was the dearest at 158.1 cents a litre.
3.48pm: Air Pacific will revert to is previous name, Fiji Airways, in a bid to more closely associate itself with the tourist hotspot.
Air Pacific chief executive Dave Pflieger says the Air Pacific name is not working.
‘‘They are not recognised. They are not notable, and they don’t help us sell tickets or fill our seats with passengers coming to visit Fiji."
3.42pm: Is it time to sell BHP, ponders Intelligent Investor's Nathan Bell:
‘'Some of our best short ideas over the years have looked cheap all the way down," says legendary short seller Jim Chanos.
Chanos - perhaps the world’s most famous shorter - has made a fortune selling stocks that don’t look expensive. Investors now have to make a similar call with the world’s largest resource company, BHP Billiton.
Investors in commodity businesses like BHP have long worried about falling commodity prices and a slowdown in China. Now there are two more reasons to fret: pigs and shale gas.
3.23pm: Borrowers flocked to fixed-rate loans in March, driven both by the attractive pricing on offer and uncertainty about official rate movements to come.
Australians took out 7060 fixed rate loans in March, in original terms, or 14.5 per cent of total, according to the ABS. It was the biggest monthly amount of fixed rate loans since May 2008, when the economy was in the dog days of the financial crisis. In February, only up 5175 such loans were taken out.
“(Consumers) fix when rates are about to go higher or when they see the fixed fixed rates on offer look like good value relative to expectations of where variable rates are going to go,’’ says ANZ housing economist Paul Braddick.
3.05pm: Futures traders have decreased their bets that the Australian dollar will gain against the US currency, figures from the Washington-based Commodity Futures Trading Commission show.
The difference in the number of wagers by hedge funds and other large speculators on an advance in the Aussie compared with those on a drop - so-called net longs - was 25,104 on May 8, the least since November, and compared with net longs of 52,280 a week earlier.
The dollar is currently trading at $US1.0016.
3.03pm: French oil giant Total is looking for oil and unconventional gas projects in Australia in which it could take a role as operator, the company's chief executive says.
"There are opportunities around unconventional gas and oil," Christophe de Margerie told reporters on the sidelines of an industry event in Australia. "We are interested in the opportunities to develop our own activity, I mean by operating."
Labour costs in Australia were high but not enough to dissuade Total from investing in more projects, he said.
2.53pm: As the eurozone's finance ministers meet once again over the Greek political chaos, the FT's Wolfgang Muenchau sees four options for the troubled country:
1. status quo: more austerity and economic reforms as outlined by the International Monetary Fund and the EU
2. pursue the same plan until Greece achieves a primary balance – the fiscal balance before the payment of interest – and then to default
3. Syriza’s plan (the left-wing party which is likely to bolster its vote in a second election): cancel the austerity program immediately, reverse some of the reforms and consider the possibility of a default on the remaining foreign debt
4. immediate voluntary departure from the eurozone.
Muenchau says the first option would be the worst for the country. "Greece will end up with 10 years of depression, an inevitable euro exit and a possible breakdown of democracy," he writes.
"The best option, in my view, would be a strategy to achieve a primary balance by 2013 and then to default on all outstanding foreign debt, public and private. It would not be popular outside Greece but it would be hard to push Greece out of the eurozone."
2.41pm: Nouriel Roubini's take on JPMorgan's trading loss via a trader nicknamed the "London Whale":
The JP Morgan Whale joins the Goldman Sachs Vampire Squid in the great hall of deep-water and sinking financial monsters— Nouriel Roubini (@Nouriel) May 14, 2012
2.34pm: JPMorgan's $2 billion-plus trading loss raises serious questions about whether the New York Federal Reserve and other regulators were asleep at the wheel, Reuters asks:
Or is it asking too much of them to keep up with the financial engineering conducted by complex institutions with diverse, global operations?
The discussion may have migrated from too big to fail to too big to manage and too big to regulate.
Though the Fed - JPMorgan's primary regulator - is not supposed to prevent banks from losing money, and JPMorgan remains stable, the shock loss rattled confidence in the financial sector.
It also raises questions about how attuned regulators were to the botched derivatives trade.
2.25pm: Locally, the ASX200 is now up just 6.9 points, or 0.2 per cent, to 4292.
2.22pm: Hong Kong shares are up 0.29 per cent after China said it will cut the amount of cash banks must keep in reserve in a bid to boost liquidity in the economy.
The benchmark Hang Seng Index gained 58.51 points to 20,023.14 on turnover of $HK25.21 billion ($3.25 billion).
2.13pm: Australia has enough gas reserves to maintain current production for almost 200 years, a report released today shows, supporting the nation's push to become a global exporter to rival Qatar.
The nation has identified gas resources of about 390 trillion cubic feet, but this could double if exploration for shale gas is successful, Energy and Resources Minister Martin Ferguson says.
"This report reconfirms Australia's capacity to continue to be a major gas exporter supplying the world's growing demand for gas well into the future," he said.
As Australia rides a minerals boom, Ferguson said the nation's known gas resources, which the report found would maintain current production rates for 184 years, could rocket.
2.05pm: The federal government has opened up 27 new offshore petroleum acreages across nine basins in Commonwealth waters off five states.
Resources Minister Martin Ferguson said the 2012 acreage release included large frontier basins suited to exploration programs with numerous targets, along with smaller blocks of high prospective acreage in mature areas.
‘‘The high level of early stakeholder participation led to multiple nominations for many of these areas, which are located in a range of water depths and vary in size and exploration history,’’ he says.
1.55pm: Eurozone finance ministers, meanwhile return to action later tonight Australian time with Greek political chaos and major doubts over Spanish banking health marking the end of a rare hiatus in the debt crisis.
Ministers from the 17 currency partners making up the Eurogroup meet in Brussels from 1am AEST, aiming mainly to send a strong message to the feuding political parties in Athens that debt-laden Greece must respect the terms of a March deal for a reworked bailout package.
The alternative, increasingly floated by expert analysts and now beginning to be broached even among European Union political partners, is that Greece exits the euro.
Governments issued Athens with a clear warning last week when they withheld some monies already supposedly signed off for the immediate post-election period.
1.48pm: Easy Forex senior dealer Francisco Solar says the dollar dipped below parity briefly amid ongoing pessimism about Greece’s political situation, though it had since rebounded a little.
‘‘The Aussie finally has cracked that key level,’’ Mr Solar says.
Greece’s political parties are struggling to form a government in the wake of last week’s elections, raising concerns it may not be able to implement key austerity measures and may ultimately be pushed out of the euro zone.
‘‘It’s unprecedented, we really don’t know what the implications of a country being ousted from a monetary union are.‘‘
1.40pm: Changes to Australia's fiscal and regulatory regimes give global investors the wobbles, Santos chief David Knox says.
Governments need to be mindful of not just their capacity to facilitate investment growth, but also their capacity to impede it, Mr Knox told the opening of the Australian oil and gas industry's annual conference in Adelaide.''
We recognise the fact and respect the right of governments to make new policies,'' says Mr Knox.
''But governments need to be conscious that projects are competing for investment dollars globally.''
1.30pm: Where do you think the dollar will be at the end of the year? Here's our poll.
1.25pm: Despite today's drop below parity, the Aussie is likely to remain at elevated levels, RBA deputy governor Philip Lowe says.
"It's highly likely Australia will continue to have quite a high exchange rate for years to come," says Lowe.
The long-term average for the dollar's exchange rate is just 77 US cents.
1.15pm: JPMorgan's Tom Kennedy has an interesting angle on today's surprise rise in housing loans:
- Today’s release also highlights the recent shift in consumer attitudes towards fixed rate loans, which have become much more attractive as banks discount such products to reflect market expectations of significant further easing by the RBA.
- Fixed rate loans now make up 14.5% of new finance commitments, a post-crisis high and a notable increase from the all time low of 2.2% recorded in December 2008.
- Elsewhere, the average loan size declined 0.6%m/m and 4.6%oya, which is broadly similar to the fall in housing prices over the same period.
- This suggests that the decline in the total value of home loan finance is more a function of the lower costs of housing rather than excessive consumer deleveraging.
1.06pm: Moving away from global events and the local dollar, uranium miner Paladin Energy is down about 2 per cent after Malawi workers walked off its Kayelekera minesite over a pay dispute on Friday.
The Perth-based miner refused to meet worker's demands for a 66 per cent pay increase following a recent 50 per cent devaluation of the Kwacha, Malawi's national currency, by its government. Production at the mine was shut down for 22 hours before starting again on Saturday, Paladin told the market this morning.
But while local workers continue to strike the plant is expected to operate at about 65 per cent capacity. Some expatriate workers, mining contract staff, security essential services and some local workers either remained on site or have already returned.
1.03pm: Krugman's blog posting is trending big on Twitter in Spain, not completely surprisingly. We'll spare you Spanish tweets but here's one punter summing it up:
12.51pm: Talking about Greece's looming exit: Paul Krugman's latest blog on an impending 'Eurodaemmerung' has caused quite a stir. In it the Nobel laureate says:
1. Greek euro exit, very possibly next month.
2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.
3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.
3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.
4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:
4b. End of the euro.
12.49pm: Greece's potential exit from the eurozone is weighing heavily on risk assets like the dollar, NAB currency strategist Emma Lawson says:
- Greece’s exit from the euro is becoming more and more a mainstream discussion, and this is potentially destabilizing for markets.
- In this generally risk-off environment the risk is to the downside in the Aussie.
12.44pm: In other news, Royal Dutch Shell Australia chairwoman Ann Pickard has confirmed that Shell's plan to build a liquefied natural gas plant at Gladstone is still on track.
She told oil and gas industry conference that its Arrow LNG project intended to sell the initial "ramp up" gas from Arrow to other gas users in the area until the plant was built and ready to receive gas.
Pickard noted that the costs on its Arrow LNG project in Australia have remained roughly constant since it took over the project about two years ago, in stark contrast to other LNG schmes that have been subject to massive cost blow-outs.
12.39pm: A number of factors are conspiring against the dollar, Forex.com market analyst Chris Tedder says:
- We don’t have a lot of upside for the Aussie at the moment.
- On the downside, we’ve got political uncertainty in Greece, we’ve got the Spanish banks, and disappointing economic data of late both domestically and in our largest trading partner- China.
- It’s painting a bearish picture for the Aussie. From here we’re going to see it continue to slip lower.
12.35pm: The Reserve Bank’s recent interest-rate cuts should help bolster the nation’s non-resource industries hobbled by an elevated currency, deputy governor Philip Lowe says:
In terms of output, overall gross domestic product is expected to return to around trend over the forecast horizon, with the recent reductions in the cash rate providing some boost to demand in the non-mining-related parts of the economy, Lowe said in a speech in Melbourne today.
It does seem likely that growth in some sectors will remain below the average experienced over the past couple of decades. How things develop will depend importantly on the ability of firms to improve their productivity and on the ability of the labor market to match workers with new jobs being created.
The overall picture is one in which aggregate demand has grown strongly, and is expected to continue to do so. However, a higher-than-average share of that growth in demand is being met through imports, not only because of the high exchange rate but also because of the heavy weight of resource sector investment in overall demand.
12.29pm: The dollar dropped as low as 99.96 US cents before recovering a little to currently trade at $US1.0005. That was the first time since December 21 that the dollar fell below parity with the greenback, ending its longest stretch ever above parity.
12.25pm: The dollar has just slipped below parity and is trading at 99.99 US cents. It's also trading at 77.65 euro cents and 80.06 yen.
12.24pm: Traders say European woes were weighing on investor sentiment and that markets are range bound in the short term, but that Cina’s monetary easing is cheering the market somewhat.
"The main story from the weekend was China. Although this was well flagged, it is still having a slight positive bearing on the resource space and other risk assets," says Stan Shamu, strategist at IG Markets.
China's central bank on Saturday cut the amount of cash that banks must hold as reserves, to head off a sudden slowdown in the world's second-largest economy following sharp drops in industrial production and fixed asset investment in April.
12.22pm: The local market is holding up a bit better than others in the region, with rises in BHP and the big banks offering some support.
12.17pm: Most regional markets have opened lower, adding to the pressure on the dollar:
- Japan (Nikkei): +0.2%
- Hong Kong: -0.2%
- Shanghai: -0.2%
- Taiwan: -0.6%
- South Korea: -0.7%
- Singapore: +0.25%
- New Zealand: +0.3%
12.12pm: After the last rate cut, and ahead of an expected further 75bp in reductions, economists have been busy adjusting their predictions for the dollar.
National Australia Bank cut its outlook for the Aussie to 98 US cents in September, from an earlier projection of US$1.02, noting that domestic rather than global factors are behind the decision.
- “It is the domestic factors which have changed and are likely to drive the Australian dollar lower quicker than we had previously anticipated,” says NAB currency strategist Emma Lawson.
- “The NAB economics team now expect two more 25 basis points easings, and possibly more if the economy further deteriorates,’’ said Ms Lawson.
Westpac lowered itsr target for the Aussie from parity to 98 US cents by the end of September, following the RBA’s rate cuts this month. Commonwealth Bank also trimmed its forecast to 98 US cents in June, down from a previous forecast of $US1.08.
- “The macroeconomic combination of fiscal contraction and interest-rate cuts should lower the exchange rate,” Richard Grace, chief currency strategist and head of international economics at CBA, says.
- “Australia’s terms of trade have peaked, and the Aussie should tread a little bit lower as a result of that."
12.04pm: The dollar is again poised to drop below parity, falling to $US1.0007, the day's low, a couple of minutes ago. It's at $US1.0011. Can't be too long now.
Do you think the dollar will drop below parity today? Here's our poll.
The following chart shows the dollar's sharp drop since the beginning of the month - following very benign inflation data and the ensuing 50 basis point rate cut by the RBA:
12pm: Former ABC Learning Centres CEO Martin Kemp has pleaded not guilty to charges relating to the collapse of Australia's biggest childcare chain.
Kemp pleaded not guilty on Monday in the Brisbane District Court to two counts of breaching the Corporations Act.
He is charged with one count of dishonestly using his position as a company director and one count of failing to act in good faith as a company director.
The alleged offending occurred between January and February 2008. His trial has been set down for four weeks.
11.55am: Apple co-founder Steve Wozniak says he will buy shares in Facebook when the social networking company sells stock to the public in what may be a record initial public offering for an internet business.
Wozniak, who built the first Apple computer with Steve Jobs and co-founded the company with him in 1976, said he would buy Facebook's stock regardless of its valuation.
Facebook plans to raise as much as $US11.8 billion in an IPO scheduled for May 17 in what would be the biggest in history for an Internet company. The company is offering 337.4 million shares to the public at $US28 to $US35, giving it a market value at the top of the range of $US96 billion.
"I would invest in Facebook," Wozniak said in an interview with Bloomberg Television. "I don't care what the opening price is."
11.50am: Hong Kong shares have opened 0.37 per cent higher after China cut the amount of money banks must keep in reserve in a bid to boost lending.
The benchmark Hang Seng Index is up 72.89 points to 20,037.52.
11.46am: JPMorgan senior economist Ben Jarman says the home loans release is an 'ok' result.
"It's telling us things weren't too weak going into the RBA's 50 basis cut which they delivered a couple weeks ago."
11.38am: Home loans posted a surprise increase in March, offering a hopeful sign for Australia's struggling housing sector.
Home loans rose 0.3 per cent in March, following a 2.5 per cent decline in February, data from the Australian Bureau of Statistics. Economists polled by Bloomberg predicted a 2 per cent fall.
11.32am: Now for a change of pace... one to watch on overseas markets tonight might be the Williams F1 team.
Williams, with Venezuelan Pastor Maldonado at the wheel, took its first race win in 8 years in Spain but the joy was soon overshadowed by a dramatic post race fire in the outfit’s pit that injured 16 people.
After several years of lacklustre form, the win will be worth millions to the one-time F1 powerhouse which in recent times has lost major backers, including RBS.
On the Frankfurt exchange, William F1 shares were down to 12.5 euros each back on 19 August last year, but have since rallied to 22.05 euros as of Friday. They are up 16 per cent this year, giving the group a market value of 220 million euros ($283 million).
11.25am: Parity may have to wait... the dollar is now at $US1.0021. Click here to more currencies and cross rates.
11.19am: Oil has fallen to the lowest price in almost five months in New York and Brent crude slid in London after Saudi Arabia's oil minister said the European benchmark grade should trade at about $US100 a barrel.
West Texas Intermediate futures declined as much as 0.8 per cent to the lowest level this year. Brent, the benchmark for more than half the world's oil, should drop as crude supply outweighs demand by 1.3 million to 1.5 million barrels a day, Ali al-Naimi said in Adelaide yesterday. Saudi Arabia increased output last month to the highest in more than three decades, according to data it provided to OPEC.
11.10am: BHP Billiton has appointed the former head of global chemicals and energy company Sasol to its board.
Pat Davies will be an independent non-executive director at BHP from June 1.
He retired from Sasol in 2011 after six years as its chief executive. The appointment takes BHP's number of non-executive directors to 12.
11.06am: "The main story from the weekend was China. Although this was well flagged, it is still having a slight positive bearing on the resource space and other risk assets," says Stan Shamu, strategist at IG Markets.
China's central bank on Saturday cut the amount of cash that banks must hold as reserves, to head off a sudden slowdown in the world's second-largest economy following sharp drops in industrial production and fixed asset investment in April.
11am: Japanese stocks have opened 0.39 per cent higher but analysts warn gains are likely to be limited as the ongoing political uncertainty in Greece weighs on sentiment.
The Nikkei index at the Tokyo Stock Exchange is up 35.32 points to 8988.63 minutes after the opening bell.
10.55am: Lend Lease and a Leighton Holdings subsidiary have been awarded work on Victoria's regional rail link.
Lend Lease's Abigroup business was awarded a contract worth about $750 million for work on the city to Maribyrnong River section of the rail line.
Leighton subsidiary John Holland was awarded a $570 million contract for work on the same stage of the rail project, which will separate regional trains from metropolitan trains on the Melbourne rail network.
10.50am: CMC Markets chief market strategist Michael McCarthy says the market has opened up better than expected, albeit in cautious trading, given Westpac went ex-dividend at the start of trade.
''The market is taking it as a positive that the Chinese authorities have moved to ease monetary conditions and stimulate demand.''
10.44am: As the graph above shows, stocks are heading higher. After a flat start, the ASX200 index is up 15.1 points, or 0.4 per cent, at 4300.2.
10.42am: Gold producer Newcrest Mining is one of the companies feeling the impact of lower gold prices. It's 1.4 per cent lower after gold prices posted their worst weekly drop in 2012.
10.37am: NAB says it will raise up to $500 million by issuing subordinated notes to investors.
The issue of the unsecured, subordinated debt obligations has the ability to raise more or less than $500 million, NAB says.
''The offer provides investors with the option of a simple, attractive, yield-based subordinated debt investment in a major bank which can diversify an investment portfolio and provide the benefit of a regular, quarterly interest payment,'' NAB's executive director of finance Mark Joiner says.
10.34am: Among the miners, BHP is up 10 cents, or 0.3 per cent, to $34.47, Rio Tinto has gained 18 cents, or 0.3 per cent, to $61.25 and Fortescue is unchanged at $5.39.
10.30am: Among the market indices, materials and financials are flat, energy stocks are up 0.5 per cent while gold stocks are down 0.9 per cent.
10.28am: Paint maker DuluxGroup has reported a two per cent fall in first-half net profit and says it expects the full-year result, on an adjusted basis, to be higher than the previous year.
The company's net profit for the six months to March 31 was $47.9 million, down from $48.7 million in the prior corresponding period. Revenue rose 8.0 per cent to $528.5 million, DuluxGroup says.
Its shares are down 1 cent, or 0.3 per cent, to $3.02.
10.25am: NAB, CBA and ANZ contributing the most to the market's modest early rise.
Westpac, though, is the main drag on the index. It's going ex-dividend today, after paying out its 82 interim-cent dividend. Westpac shares are down as much as 92 cents, or 4 per cent, to $21.81.
10.19am: The dollar has bounced back a bit - it's buying $US1.0031 US cents.
10.15am: Shares are now up just 6.3 points, or 0.1 per cent, to 4291.4.
10.09am: Australian 10-year bond future prices have risen to their highest level ever amid fears about the fallout of Greece's political crisis.
The June 10-year bond futures contract was trading at 96.795 (implying a yield of 3.205 per cent), their highest level ever, up from 96.760 (3.240 per cent) on Friday.The June three-year bond futures contract was at 97.400 (2.600 per cent), up from 97.360 (2.740 per cent).
10.06am: Incitec Pivot has reported a 20 per cent fall in first-half underlying profit, just missing analysts' forecasts as fertiliser earnings were weaker than expected.
Incitec did not reaffirm it expects modest profit growth this year. The firm is expecting a strong pick-up next year, with its $935 million Moranbah ammonium nitrate plant in Australia due to open in July.
It warned explosives volumes in North America in the second half were likely to be affected by the recent decline in U.S. coal production, where power generators are switching to cheap natural gas.
Its share are down 4 cents, or 1.3 per cent, to $3.12.
10.03am: Early market take - stocks are up 3.4 points, or 0.1 per cent, to 4291.7.
9.55am: In news today, DuluxGroup and Incitec Pivot will lead local corporate news this week, when they report first-half profits.
Housing finance figures for March will provide an indicator of the health of the country's real estate market.
Investors, meanwhile, are currently pricing in the prospect of another interest cut by Reserve Bank when it meets in June as about a two-in-three chance.
9.46am: Perpetual Investments head of investment market research Matt Sherwood says the dollar could fall through parity with the greenback this week.
"We're almost there," he says. "It has really continued this two-month process of the Aussie dropping by around 8 per cent."
"We are expecting it to fall through parity over the next week, as these Europe concerns continue to bite the market."
"If Europe stays together, you could see the dollar going through 98 US cents," he says. But if the Europe deteriorates, China slows further and the US recovery continues to stall, the Aussie's risk is "to the downside" of 98 US cents.
9.41am: It's worth pointing out that the futures reading was set early on Saturday morning. Since then, the Greek political crisis has deepened with the country's biggest anti-bailout country again refusing to join a unity government, increasing the likelihood of a fresh election.
9.37am: The dollar has been as low as $US1.0007 this morning - it's now at $US1.0013.
9.32am: As the dollar edges closer to parity with the greenback, Aussie shares appear to be in for a flat start to the week. For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:
SPI futures are up 2 at 4287 points
Wall St.: JPMorgan drags on shares
European stocks pare losses
Oil sinks to 2012-lows
Gold slides to four-month lows
Wall St. week ahead: Banks, Europe to set scene
Australian business calendar May 14-18
Business press digest: May 14
9.30am: Good morning folks. Welcome to the Markets Live blog for Monday.
This blog is not intended as investment advice
Contributors: Peter Litras, Peter Hannam, Jens Meyer
BusinessDay with agencies