That's all for today - thanks everyone for reading. We'll be back tomorrow morning at 9am.
Here's the evening wrap of today's session.
Mining powerhouse Rio Tinto has reported a net loss of $US2.99 billion - the first in its history - dragged down by well-flagged impairments against its aluminium and Mozambique coal assets.
After one-offs, Rio’s underlying earnings exceeded expectations, reporting underlying earnings of $US9.3 billion in 2012, above the consensus of analyst estimates of $US9.1 billion.
Here's what you need2know this Thursday evening:
Markets
- The ASX200 jumped to its highest close since September 2008, finishing at 5036.9
- The dollar inched up to $US1.0352
- The Nikkei is up 0.44%, Kospi is up 0.2%, Chinese markets closed
- Spot gold relatively flat at $US1645.80, while WTI oil was lower at $US97.12
- Wall Street futures minimally flat, while FTSE100 is also pointing to a flat open
News
- Rio Tinto posts first-ever net loss
- Coles fuels Wesfarmers growth
- Predatory behaviour? Investigation at Coles
- DJs turns off music as sales slip
- Downer gets thumbs up from investors
- Widening margins good news for Westpac
Overnight
- US retail sales
- France GDP
- German GDP
Tomorrow
- ANZ quarterly update
- DUET earnings report
- Sims Group earnings report
Rio Tinto is set to post second-half earnings in 30 minutes. The miner is expected to report a 49 per cent plunge in second-half profit to $US3.93 billion.
Excluding big writedowns, though that would still leave full-year profit at $US9.08 billion. Iron ore is expected to make up close to 90 per cent of earnings, with losses expected in aluminium and diamonds.
Rio shares rallied 2.3 per cent in anticipation of a good result.
And here are the best and worst performers for the day on the ASX200:
Among the sectors, materials surged 1.9 per cent, energy gained 1.2 per cent and consumer staples added 0.5 per cent. Health finished down 1 per cent and gold miners lost 1.1 per cent.
The market has closed higher, fuelled by strong results from Wesfarmers and a healthy boost from the mining sector. The S&P/ASX200 had its highest close since September 2008, jumping 33 points, or 0.7 per cent, to 5036.9, while the broader All Ords rose 32.7 points, or 0.7 per cent, to 5057.2.
BusinessDay's Paddy Manning has gathered together some extra information on CITIC's purchase of a 15 per cent stake in Alumina.
Deutsche Bank’s head of mining research Paul Young said the deal was ‘‘mildly value dilutive,’’ reducing Deutsche’s valuation of the company by about 3c per share to $1.39, but would add to earnings, cutting Alumina’s interest expense by $US30 million a year.
While Deutsche welcomed the deal and reiterated its ‘‘buy’’ recommendation on Alumina, Mr Young said alumina fundamentals were improving ‘‘rapidly’’ and noted: ‘‘existing shareholders were not given the opportunity to participate in the deal’’.
‘‘Furthermore, spot alumina prices are now only just starting to rise and debt covenants had been cleared out to 2015, so the placement may be slightly premature’’.
Mr Young said both bauxite and alumina prices were likely to rise further as Chinese demand improved.
PhillipsCapital analyst Lawrence Grech said CITIC’s deal with Alumina ‘‘just goes to show you how much money they really needed. Alumina was in need of capital and they’ve got it. That’s a positive. Does it change the underlying (profit) margins of its business? The answer is, not in the short term.’’
Queensland coal explorer Cuesta Coal says it has received approval to explore tenements in which it has a joint stake with a company controlled by Gina Rinehart’s Hancock Prospecting.
QCI (Galilee), a wholly owned subsidiary of Hancock Prospecting, will be able to earn up to a 51 per cent interest in the Snake Creek Joint Venture for its two-stage, $3 million investment.
Cuesta Coal has a portfolio of thermal and coking coal exploration prospects within the Bowen, Surat and Galilee basins in Queensland.
The company’s core projects are on 11,000 square kilometres of exploration ground.
Cuesta shares are flat at 13 cents.
This one from BusinessDay's Michael Pascoe went up quite late yesterday, but it's definitely still worth a read.
Consumer sentiment jumps, there’s a surge in advertising for get-rich-quick spruikers, the newsletter peddlers are turning from fear to greed – with the surge in bull, it really might be a bull market.
The February Westpac-Melbourne Institute consumer sentiment index published today is up a sharp 7.7 points to a healthy 108.3, its highest level in 26 months.
Maybe this rise is a little too sharp to mean as the demographic breakdown of the survey shows the biggest impetus came from those aged 18 to 24 (up 32 per cent), sales/clerical staff (also up 32 per cent) and those with a household income of between $20,000 and $40,000 (up 9.6 per cent). So poor, young shop assistants might be feeling chipper with the January sales behind them.
The Institute’s trend measurement smooths out the spike to show a more modest 1.4 per cent rise for a still-reasonable score of 104.5, up 6.5 per cent on this time last year. Fewer scary headlines about North Atlantic economic crises, lower interest rates, a rising stock market and some firmer housing prices seem to be doing their trick.
And there’s another harder-to-manage indicator of an outbreak of optimism: the get-rich-quick spruikers seem to be on the rise again and the tone of investment newsletter peddlers is changing from selling fear (“The market is about the crash and the economy is cactus”) to greed (10 top stocks to make you money”).
BusinessDay's Mal Maiden has put together a nice analysis of the ACCC's investigation into the supermarket duopoly.
Australian Competition and Consumer Commission chairman Rod Sims' disclosure that the competition regulator has escalated an investigation into the two big supermarket chains over possible anti-competitive behaviour towards suppliers is a watershed moment.
The competition regulator can demand that information be supplied to it in the formal investigation it is now running, so allegations that the supermarket misuse their power in their dealings with suppliers will finally be thoroughly examined. It it may in time come to be seen as the point at which the enormous power of the two retailing giants finally began to be reined in.
When Sims says that the Australian Competition and Consumer Commission is now investigating whether the "major supermarkets" breached competition law in their dealings with suppliers he is talking about Woolworths and Wesfarmers-owned Coles, the two chains that dominate grocery retailing in Australia.
The Bank of Japan kept monetary policy steady and raised its assessment of the economy on Thursday, as the yen's recent declines and budding signs of recovery in global demand offer some relief to the export-reliant economy.
"Japan's economy appears to be bottoming out," the central bank said in a statement announcing its policy decision.
BOJ board member Ryuzo Miyao proposed continuing the BOJ's policy of keeping interest rates virtually at zero until the central bank's target of 2 per cent inflation is in sight. His proposal was voted down 8-1.
Wesfarmers has confirmed that an internal investigation is underway that will examine whether the nation's second-biggest supermarket chain is engaging in improper predatory and anti-competitive behaviour.
Managing director Richard Goyder confirmed the internal investigtation during a press conference for Wesfarmers half year results, after the head of the competition watchdog launched a blistering attack on the supermarket industry last night.
‘‘We are doing our own investigations and obviously the ACCC is doing its and we will just let it all unfold,’’ Mr Goyder said
After being up as much as 17 per cent earlier today, shares in Alumina are currently up 9.6 per cent to $1.32. As reported earlier, this has been caused by China's Citic Resources Holdings purchasing a 15 per cent stake in the aluminium producer.
Well it looks like the carbon and mining taxes haven't treated shares badly, says Stephen Korkoulas.
Australians getting wealthier by the day it seems. ASX up 0.5%; now up over 22.5% since carbon/mining tax or $271 billion, plus dividends
— Stephen Koukoulas (@TheKouk) February 14, 2013
Valentine's Day hasn't rubbed off (sorry) on the share price of Ansell, the condom to gloves maker, with the shares down another 27 cents, or 1.7 per cent, to $15.76, but off its low of $15.64, following its sharp sell-off yesterday on disappointing December half earnings.
Earnings a share for the half fell to 42 cents from 49.3 cents hit by squeezed margins which has raised questions about the company's growth profile. The poor numbers drove yesterday's 97-cent sell-off.
With plenty of cash on the balance sheet, it has flagged a buy-back of up to three million shares over the next 12 months.
But since shares usually continue falling for several weeks at least in response to poor numbers, the company just may bide its time before stepping in to soak up excess scrip on the market.
The shares had won favour earlier on the back of acquisitions, which boosted hopes of strong growth, which have now been dashed.
Westpac is tipped to benefit most from the widening in profit margins from mortgage lending that underpinned the Commonwealth Bank’s latest $3.78 billion earnings result.
As investors await the next big bank profit when ANZ Bank updates its quarterly earnings report on Friday, market analysts say the CommBank’s bumper result on Wednesday suggests other lenders are also reaping the benefits of their home loan pricing decisions.
Westpac has a particularly heavy weighting towards domestic retail banking. Its share of the home loan market, at 23.5 per cent, is second only to CBA’s.
Westpac shares are up 0.4 per cent to $28.58.
With the story of the day, thus far, being Wesfarmers and it's strong earnings report, we thought we'd show you this nice graphic of its performance over the last 12 months.
Optus' result includes a $30 million one-off charge from restructuring during the quarter, the company’s parent SingTel said.
The restructure included 305 job cuts in the three months to December, trimming Optus’ workforce to 8,764.
The company has cut its workforce by 962, or 9.9 per cent, in the last 12 months, company accounts show.
Excluding the impact of restructure costs, Optus made an underlying net profit of $181 million in the three months to December, up from $177 million in the prior corresponding period.
Revenue fell 5.7 per cent from the previous corresponding period to $2.28 billion, and that followed a 4.2 per cent revenue decline in the second quarter.
The federal Treasury expects the economy to grow around trend during the next two years, but warns risks remain from a fragile global economy.
A Senate estimates hearing in Canberra today was told that as resource investment peaks over the next year, strong growth in commodity exports, continued growth in household consumption and some pick-up in dwelling construction and non-mining investment were expected.
However, nominal growth - the dollar value of gross domestic product (GDP) - will be below trend because of a decline in the terms of trade and as domestic price pressures remain subdued.
SingTel, Optus' parent company, has expressed interest to obtain a telecom license in Myanmar, but the outcome is still unclear, chief executive Chua Sock Koong said today.
She told a news conference that Myanmar has indicated that there are two more licenses to be given.
The resources division at Wesfarmers was the one black spot in the earnings report, hurt by the strong dollar and weak coal prices, notwithstanding a steep decline in costs, down 20 per cent.
Revenue of the division slid by a quarter to $826 million, with earnings before interest and tax slumping to just $93 million in the December half from $250 million a year earlier.
In turn, this sliced the return on capital to a still respectable 19.4 per cent from 25.4 per cent a year earlier.
It flagged continued soft export prices along with an ongoing focus to squeeze costs, so a quick rebound doesn't appear to be in the script.
Needless to say, investors aren't too worried about the resources division, as the shares hit their highest since December 2007, rallying as much as 2.7 per cent.
Wesfarmers' insurance division recorded earnings of $104 million, $87 million above the prior corresponding period, while its chemicals, energy and fertilisers division posted earnings of $104 million, up 5.1 per cent. Industrial safety operations netted $88 million in earnings, down 9.3 per cent, mainly due to lower sales and increased margin pressure, particularly from customers in the resources industry.
The half-year result was inline with analyst expectations of a half-year profit of around $1.2 billion although the interim dividend was slightly ahead of some estimates with some analysts tipping a dividend of 75 cents per share.
Wesfarmer shares are now up 2 per cent to $39.21.
Ahead of Rio Tinto reporting after the market closes today, the major miners are giving the ASX a nice boost.
Rio is up 2.3 per cent to $72.07, BHP has added 1.6 per cent to $38.53 and Fortescue has risen 4.4 per cent to $5.40.
More on Wesfarmers, the company said its hardware business Bunnings had interim pre-tax earnings of $518 million, up 6.8 per cent for the half. Earnings at Kmart rose 24.9 per cent to $246 million but its stablemate Target continued to suffer in the current trading environment, with its earnings falling 20.4 per cent to $148 million.
Earnings at Wesfarmers resources division, which sells coal, fell 62.8 per cent to $93 million as that business was hurt by lower coal prices and a strong Australian dollar.
Wesfarmers has posted its first-half results and they look pretty good. Shares are rising on the report, after being down earlier. Here are the highlights:
- Operating revenue of $30.6 billion, up 3.2%
- Earnings before interest & tax of $2,043 million, up 5.5%
- Finance costs of $229 million, down 13.3%
- Net profit after tax (NPAT) of $1,285 million, up 9.3%
- Earnings per share of $1.11, up 9.2%
- Net capital expenditure of $1,120 million, down 11.3%
- Fully franked interim dividend of $0.77 declared, up 10.0%
Japanese stocks are down after data showed the country’s economy unexpectedly contracted ahead of a Bank of Japan policy decision today.
The Topix, Japan’s broadest equity gauge, fell 0.5 per cent, erasing gains of as much as 0.2 per cent.
‘‘Investors may take a wait-and-see approach ahead of the G-20 and the Bank of Japan’s meeting,’’ says Mitsushige Akino, Tokyo-based chief fund officer at Ichiyoshi Asset Management Co.
The boards of AMR Corp and US Airways Group separately met overnight in the US to approve a merger that would value the combined company at around $11 billion, people familiar with the matter said.
The deal, which will be announced early on Thursday, comes after the parent of American Airlines filed for bankruptcy in November 2011, and would mark the last combination of legacy US carriers, following the Delta-Northwest and United-Continental mergers.
The board approval came after AMR's unsecured creditors committee, which includes all three of AMR's major unions, met earlier in the day to approve a proposed merger agreement, the people said.
The all-stock merger would give AMR creditors 72 per cent of ownership in the merged entity and US Airways shareholders the rest, the people said.
Here's a nice break from all the earnings talk from our small business team:
Even the best workplaces contain one or two colleagues whose behaviour leaves the rest of us wondering. If you want to be able to distinguish between the The Motormouth, the One-Upper, the Loud Talker and the rest, and know how to deal with them have a look here: Field Guide to Office Jerks.
It is unusual for a small cap - and with a market cap of $220 million you could argue the toss whether it is a microcap - to win analyst coverage from an institutional broker, but this week Credit Suisse slapped an outperform rating on Mayne Pharma.
Usually the attraction for a big broker in following a tiddler stock is advisory work on future deals, and Mayne has concluded two deals in a matter of months - buying Metrics in the US for up to $US120 million and following that up with the purchase of a pain relief drug from SmithKline for $14 million.
Credit Suisse has put a target price of 45c on Mayne Pharma shares, which may be of some comfort for shareholders who missed out on its popular 29.5c a share issue which closed oversubscribed last week, resulting in investors receiving only around half of the shares they sought.
And the broker reckons its target price could be conservative, with investors yet to factor in the growth potential of the Metrics business.
Equally, with a lack of clarity about the whether Mayne Pharma's management can pull off its growth ambitions, and how long the senior management of the US acquisition will hang around, coupled with the uncertainty over how long it will take for promising products to emerge from the research pipeline, investor caution may be justified.
Mayne shares were steady at 39c after flirting with 40c earlier in the week.
Just as Wesfarmers prepares to report, the ACCC has had a swing at the big supermarkets.
The head of the competition watchdog says Coles and Woolworths may have misused their market power by demanding additional payments from suppliers to their supermarkets, and imposing unfair penalties, and discriminating against suppliers in favour of their own in-house brands.
He also said the commission was close to finalising an investigation into the petrol discounts offered by the large supermarkets. Chairman Rod Sims made the comments to the Senate economics estimates committee in Canberra on Wednesday night.
He confirmed 50 business that supply the supermarket giants had spoken to the ACCC in the past year and it was still investigating their claims.
We'll have a full story up soon.
Rod Sims . Chairman ACCC Photo: Jim Rice
Commercial property editor Carolyn Cummins writes that Mirvac’s new chief executive Susan Lloyd-Hurwitz has canvassed the idea of a series of new ‘‘club’’ funds.
They will comprised of key assets in which a range of super funds and local and overseas-based investors all have a stake. The plan, still being completed, was aired at the group’s half year result where a net profit of $194.2 million was reported, down 4 per cent and after an impairment of $273 million.
And just recapping some of the other property news today, for the full year to December 31, 2012, GPT has more than doubled its net profit and believes further earnings growth is on the way, albeit at a slower pace.
GPT’s net profit for the year to December 31 rose to $594.5 million, from $246.2 in 2011, from a a rise in the value of its property portfolio. Dexus unvieled a net profit for the half of $267 million or 5.65¢ per security, an increase of $121.3 million from the prior corresponding period (2011: $145.7 million). The gains came from asset sales and property revaluations.
Shares in SAI Global have slumped after the company reported revenues were up 6.5 per cent for the half year, but profits were down 14.9 per cent. The company's shares have lost 15.7 per cent to be the worst performed stock on the ASX200. Here are the other major sliders:
- Perseus: -5.68%
- GUD Holdings: -5.52%
- Alacer Gold: -5.24%
- Regis Resources: -4.56%
- Myer: -3.36%
Japan's economy shrank 0.1 per cent in October-December from the previous quarter, falling for a third straight quarter, government data showed on Thursday, in a sign the nation is struggling to escape from a mild recession.
The decline compared with a 0.1 per cent expansion that was forecast by economists, and followed a revised 1.0 per cent contraction in July-September.
Japan's gross domestic product (GDP) figure translated into an annualised decline of 0.4 per cent, compared with a median forecast from economists of a 0.5 per cent rise and a 0.1 per cent fall in the United States in the same quarter.
"Japan's economy may show some weakness for the time being. But it is likely to resume a moderate recovery thereafter due to the Bank of Japan's monetary easing, the effect of an emergency economic package, as well as an expected moderate recovery in the global economy," Economics Minister Akira Amari said in a statement.
Financial services reporter Eric Johnston writes that Westpac Bank is seen as receiving the biggest boost from Commonwealth Bank’s bumper $3.78 billion first half profit result.
As Nomura’s Victor German points out, CBA’s retail banking business, which represents around 40 per cent of group earnings, was among the standout performers helped by a rebound in margins on mortgage pricing.
“In the short term, these trends are favourable to retail overweight banks and we expect Westpac to benefit,” German says. Remember CBA has the biggest market share in mortgages on 25.1%, followed by Westpac (23.5%), National Australia Bank (15.1%) and ANZ (13.7%).
However, German points out in a “low growth” environment the longer term outlook for the banking sector remains challenging. At 1100 AEST shares in CBA shares are down 31 cents at $66.80, Westpac is off 2 cents at $28.31, ANZ is down 12 cents at $27.69, NAB is down 34 cents at $28.95.
Gail Kelly at the 2012 Westpac AGM at the Westpac building in Sydney. Photo: Nic Walker
CommSec analyst Juliana Roadley said several key companies were still to report today, including Wesfarmers and Rio Tinto, and investors were remaining cautious.
‘‘People are just waiting on those big numbers to drop, as well as the fact that there’s a reaction to the CBA share price and also the CBA result yesterday,’’ she said.
‘‘Everyone’s looking internally, trying to pick where the next growth is going to be and whether our market has run up too hard ahead of itself,’’ Ms Roadley said.
‘‘We need to see a bit more confidence building on the back of these gains to be able to hold on to and I think that’s what’s really weighing on investors’ minds at the moment.’’
Ahead of the release of its full year results, Rio Tinto was up $1.25, or 1.77 per cent, at $71.71.
Quick recap on some of this morning's companies news:
- Downer EDI: H1 net profit $94m million, up from $84.9, +11%
- Mirvac: H1 profit $55.2 million, down from $176.6, -69%
- GPT: H1 profit $594.5 million, up from $246.2
- Dexus Property Group: H1 net profit $267 million, +83%
- David Jones: 1.4% drop in Q2 sales to $590.1 million
With the Chinese new year in full swing, and the nation enjoying a holiday, here's an interesting stat, and one that might bring a different sort of tear to James Packer's eye:
#Macau welcomed almost 478,000 visitors from Sunday until Tuesday, an increase of 21.8% from last year. #CNY ow.ly/2uRqE8
— Chester Tulloch (@ChesterTulloch) February 13, 2013
And now for the banks:
- CBA is 0.37% lower to $66.86
- ANZ is 0.43% lower to $27.69
- NAB is 1.09% lower to $28.97
- Westpac is 0.25% lower to $28.26
The big miners are having a positive start to the day. In fact they're well ahead of most other sectors, including the banks which have given back some of yesterday's gain:
- BHP is 0.87%% higher to $38.25
- Rio is 1.66% higher to $71.63
- Fortescue is 2.71% higher to $5.31
A quick look now at the sector-by-sector performance of the ASX200:
- Materials: +0.67%
- Energy: +0.48%
- Industrials: +0.37%
- Telecoms: +0.16%
- Finance: +0.21%
Other than Downer EDI and Alumina, which are leading the market, here are the other strong performers on the ASX200 in early trade:
- Paladin: +3.93%
- Skilled Group: +3.82%
- Transfield: +3.78%
- Iluka: +2.92%
- Caltex: +2.62%
- FMG: +2.51%
Alumina shares have also jumped following the announcement of a deal with Chinese financial company CITIC, which has paid $452 million for a major stake in aluminium producer Alumina.
Its shares have added 12.5 per cent, or 14 cents, to $1.34.
Downer EDI shares are 14 per cent higher after reporting a net profit after tax of $94 million for the six months to December, a 9.6 per cent increase from the previous corresponding period.
David Jones shares,on the other hand, are 1.4 per cent lower after a disappointing second quarter sales result.
For all the lovers out there... Going back to 1983, the All Ords/#XJO has finished #ValentinesDay higher on 59.09% of occasions #ausbiz — David Scutt (@David_Scutt) February 13, 2013
Both the All Ords and the ASX200 are holding above 5000 in opening trade.
The All Ordinaries index is 4 points higher, or 0.1 per cent, to 5028.5, while the benchmark S&P/ASX200 is 3.5 points higher, or 0.1 per cent, to 5007.2.
On the ASX 24, the March share price index futures contract was up eight points at 4,964, with 6,076 contracts traded.
Just a reminder - for all the news from earnings season, check out the BusinessDay earnings page. That's where you'll find a stockpile of this seasons results.
Australia’s number two telco, Optus, has posted a 9.2 per cent fall in third quarter net profit amid flat mobile subscriber growth.
Its parent company Singapore Telecommunications (SingTel) on Thursday said Optus’ net profit for the three months to December 31 was $A160 million, down from $A177 million in the prior corresponding period.
At December 31, 2012, Optus had 9.565 million mobile subscribers, compared with 9.544 million at September 30, SingTel said in a statement.
On the DJs numbers:
David Jones sales still sliding, don't expect miracles from Myer either. Looking forward to Target's numbers out today #ausbiz
— Peter Esho (@PeterEsho) February 13, 2013
More on David Jones. Sales revenue for the six months to December was down 0.7 per cent to $1 million from the previous corresponding period.
David Jones' chief executive and managing director Paul Zahra said the results for the quarter, which included in the Christmas period, reflected growth in high-margin categories such as womenswear, beauty and accessories.
But he said that the company's sales performance was "adversely impacted" by products in the home categories such as electronics.
"Our focus is on improving the profitability of sales. We are exiting the low-performing categories of DVDs, music and games.
"We also continue to reduce the depth and breadth of our promotional discounting events and continue to work on changing our category mix to increase focus on higher margin categories."
David Jones. Photo: Michael Clayton-Jones
David Jones has reported a 1.4 per cent drop in total sales revenue to $590.1 million for the second quarter of the 2013 financial year.
BusinessDay’s Malcolm Maiden has a word of advice on yesterday’s milestone:
Think of the 5000-point index mark that was topped yesterday for the first time since April 2010 the same way you think about birthdays. They are basically just another dot on a long line, but you break out the candles anyway, because they are sentimental milestones.
Just like birthdays, however, milestones like the one the sharemarket reached on Wednesday provide next to no guidance about what's going to happen. You might get hit by a bus with the birthday cake in your hand - and since the global financial crisis began the market has been at these levels and then been hit by a bus three times.
Following yesterday's blockbuster CBA result ...
Retail banking is back. Analysts say in wake of bumper $3.8bln CBA 1H profit, banks overweight in retail - such as Westpac - to benefit.
— Eric Johnston (@ejohnno) February 13, 2013
Diversified property group GPT has more than doubled its full year net profit and believes further earnings growth is on the way, albeit at a slower pace.
GPT’s net profit for the year to December 31 rose to $594.5 million, from $246.2 in 2011, thanks to a rise in the value of its property portfolio. Revenue rose to $587.4 million from $573.8 million, while earnings per share (EPS) rose eight per cent.GPT, which owns shopping centres, office properties and business parks across Australia, forecast earnings per share growth of at least five per cent this financial year.
Chief executive Michael Cameron said the result was driven by a $221.3 million increase in the value of the group’s property assets, which offset a $40.4 million loss on derivatives.
‘‘The outlook for 2013 is cautiously optimistic, with portfolio growth supported by high levels of structured rental increases and high occupancy,’’ he said in a statement.
So, where is the market headed today? Up, up and away, or will we see Aussie stocks consolidating recent gains, or handing them back?
Evan Lucas at IG Markets is calling the ASX200 down 6 points at the open to 4998 ‘‘as investors and analysts alike digest whether the ASX is truly valued at 5000 points’’.
Watch for broker downgrades in CBA today; while they are unlikely to have a major effect as CBA goes ex-dividend on Monday, post the dividend will be interesting.
Today, however, our attention will turn to London, with Rio reporting its full-year 2012 results after market. Analysts are expecting approximately $9 billion in underlying earnings with 80% of that coming from the iron ore division (the division news-installed CEO Sam Walsh has controlled for years).
Dexus Property Group has reported a net profit of $267 million for the six months to December, an 83 per cent increase from the previous corresponding period.
The company declared an interim dividend of 2.89 cents per share.
"The group made solid progress on achieving its vision of being globally recognised as Australia's leading real estate company combined with its objective of being the leading owner and manager of Australian office, through the sale of offshore properties and numerous off market acquisitions," Dexus chief executive Darren Steinberg said.
"the US portfolio sale considerably improves the quality of the group's earnings profile as the proceeds are reallocated into the Australian market."
Here's a quick look at the reporting calendar for today. We'll publish all the news, analysis and sharemarket reactions as it breaks:
- The following companies report first-half results: ASX Ltd, Goodman Fielder, Whitehaven Coal, Wesfarmers, Forge Group, Perseus Mining, Paladin Energy, Mineral Resources, Adelaide Brighton, Aurizon Holding
- GrainCorp full-year update and guidance call
- Rio Tinto full-year results - late tonight AEDT
- David Jones Q2 sales results
Some analyst rating changes for today:
- Commonwealth Bank cut to underperform at CIMB
- OZ Minerals cut to sell at Deutsche Bank
- Domino's Pizza cut to neutral t JPMorgan
- Carsales.com.au cut to underperform at CIMB
- Skilled Group raised to buy at Moelis & Company
- Commonwealth Property cut to underweight at JPMorgan
Chinese financial company CITIC has paid $452 million for a major stake in aluminium producer Alumina.
CITIC will buy more than 366 million new Alumina shares, which will equate to just over 13 per cent of Alumina’s total share base, under a deal announced on Thursday.
The new shares will be bought for $1.235 each, raising $452 million for the Alumina.Alumina said CITIC would be a strategically aligned and financially strong long-term investor.
‘‘CITIC’s investment demonstrates their confidence in the alumina industry and their understanding of Alumina Ltd’s unique position in the global market,’’ Alumina chief executive John Bevan said in a statement.
The funds raised by the new share placement would be used to pay down debt, Alumina said.
Could an already unpopular government be about to become even less so? Federal Treasurer Wayne Swan has refused to rule out income tax increases as a way of offsetting revenue shortfalls in his budget.
Mr Swan, speaking to ABC Radio this morning, was asked four times whether he would increase income taxes in the May 14 budget as claimed by the opposition.
‘‘I’ll leave the speculation for everybody else,’’ he said.
‘‘There’ll be hundreds, hundreds of stories between now and budget day and most of those stories will be wrong.’’
When asked whether he could guarantee Australians there would be no increase to income taxes, the treasurer said:
"I don’t in the lead-up to any budget ... go into that rule-in-rule out routine."
This blogger would have thought raising taxes was something you did in the first budget after winning an election. Just months out from a poll, raising taxes would be a courageous decision, to borrow a phrase from Yes Minister.
Property group Mirvac’s first half profit has dropped 69 per cent because of a massive writedown on its development projects.
Mirvac made a net profit of $55.2 million in the six months to December 31, down from $176.6 million in the previous corresponding period.
The company last week announced it would write down the value of developments in Queensland and Western Australia by $273 million and that has impacted its net profit for the first half of the 2012/13 financial year.
Chief executive Susan Lloyd-Hurwitz said Mirvac’s underlying performance was in line with expectations, and the company was on track to deliver its previously forecast full year operating earnings of about 10.7 cents per security.
The company declared an unfranked distribution of 4.2 cents per security, and expects to pay distributions of between 8.5 cents and and 8.7 cents in the full year.
If the US earnings season is anything to go by, we're in for a bumper February.
According to the latest Thomson Reuters data, of the 364 companies in the S&P 500 that have reported results, 70.3 per cent have exceeded analysts' expectations, above a 62 per cent average since 1994 and 65 per cent over the past four quarters.
Downer EDI has reported a net profit after tax of $94 million for the six months to December, a 9.6 per cent increase from the previous corresponding period.
The train manufacturer and engineering firm declared a 70 per cent franked interim dividend of 10 cents per share.
Total revenue for the company rose 20 per cent to $4.7 billion.
"The business has performed very well over the past six months," Downer chief executive Grant Fenn said.
"Each of our three divisions achieved substantial revenue growth, underlying EBIT has grown over 12 per cent and our cash performance was strong once again. We have continued to build momentum in our operational and financial performance."
The company reported an underlying net profit of $105.5 million, a 24 per cent increase from the same period the year before, which took into account a settlement over a Singapore tunnel contract.
Aussie stocks are poised for a flat start, which is broadly in line with the performance of Wall Street overnight, but a bit behind Europe.
Most US stocks rose, sending the Standard & Poor’s 500 Index to the highest level since October 2007, as investors weighed economic reports and President Barack Obama’s State of the Union address.
Four stocks gained for every three that fell on U.S. exchanges as of 4 p.m. in New York. The S&P 500 rose 0.1 percent to 1,520.29. The Dow Jones Industrial Average lost 36.33 points, or 0.3 percent, to 13,982.37.
‘‘It’s the classic battle between fear and greed,’’ said Wayne Lin, fund manager at Baltimore-based Legg Mason Inc. in a phone interview.
‘‘The fear is that equities have extended beyond what the fundamentals are. People are taking a wait-and-see attitude to see if the economic data is supporting a fundamentally cyclical recovery.’’
For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key markets numbers:
- SPI futures are 2 points higher at 4958
- The $A is higher at $US1.0343
- In recent trade in New York, the S&P500 was 0.16% lower at 1517.02
- In Europe, the FTSE100 added 0.33% to 6359.11
- China iron ore was unchanged at $US155.10 as China remains on holiday
- Gold fell $US4.50 to $US1,645.10
- WTI crude oil fell 4 US cents to $US97.47 a barrel
- Reuters/Jefferies CRB index was flat at 300.57
Hi everyone. Welcome to the Markets Live blog for Thursday.
Contributors: Thomas Hunter, Jens Meyer, Max Mason
This blog is not intended as investment advice
BusinessDay with agencies
