That's it for today. Thanks everyone for reading this blog - and posting all your comments.
Here's our evening wrap of today's session.
And Westpac has now followed suit, also shaving 20 basis points off its standard variable mortgage rater, bringing it down to 6.51 per cent.
That leaves ANZ as the last one out, but the bank won't announce its decision for another nine days, the second Friday of the month.
QBE Insurance is understood to be close to finalising its recently announced $US500 million subordinated debt issue, the AFR reports.
The listed insurer’s share price dived as much as 5.7 per cent today, and closed down 4.7 per cent, or 50 cents, at $10.10.
The AFR quotes sources as saying the group is close to finalising the subordinated debt issue, which was announced in November to shore up its balance sheet.
Talk about an equity raising has been swirling following the drop in share price, but sources close to QBE say this is incorrect. That said, analysts remain concerned about the company’s “tight” capital position, the AFR says.
The major banks are adding pressure to deposit makers while lifting the pressure on mortgage holders, adversely affecting those who live off their savings.
Canstar data shows that while the banks have been cautious to pass on full rate cuts to mortgagors, they have been eager to slash the interest paid on savings accounts.
Between May and November, the average interest collected on a five-year term deposit with one of the big banks shrunk by more than 1 percentage point – from 5.65 per cent to 4.60 per cent. The interest paid to online savings accounts declined at a similar pace.
Despite this, the average interest collected on home loans over the same period fell more conservatively, at just 0.78 percentage points.
Here's how some of the blue chips performed:
- BHP: +0.1%
- Rio: +1.6%
- ANZ: +0.7%
- CBA: +1%
- NAB: +0.25%
- Westpac: +0.6%
- Fortescue: +2.2%
- Woolies: +0.4%
- Wesfarmers: +0.4%
- Telstra: +0.9%
- QBE: -4.7%
Among the major sectors, financials rose 0.5 per cent, energy gained 0.4 per cent and materials added 0.2 per cent. Telcos rose 1 per cent, while gold was again one of the losers, falling 1.1 per cent.
The market has closed higher, with the ASX200 rising 16.8 points, or 0.4 per cent, to 4520.4, while the broader All Ords gained 16.2 points, or 0.4 per cent, to 4528.0.
In a good sign for the jobs market, the federal government’s leading employment index rose for a fifth consecutive month in December, after previously falling for seven straight months.
The federal Department of Education, Employment and Workplace Relations indicator of employment rose by 0.073 points in December, to 0.120 points.
‘‘It is still too early to confirm that a renewed quickening in the pace of employment growth above its long-term trend rate of 1.6 per cent per annum is in prospect, because the indicator has risen for fewer than six consecutive months,’’ the department said.
The leading jobs indicator anticipates movements in the growth cycle of employment, with a turning point confirmed after six consecutive monthly moves in the same direction.
CBA has followed NAB in cutting mortgage rates, and in not passing on the full RBA rate cut. The bank's standard variable rate will drop by 20 basis points to 6.40 per cent, effective next Monday.
No matter how negative the news, it just isn’t sticking to our Teflon dollar, CMC Markets Tim Waterer notes:
- RBA rate cuts, falling commodity prices, lower GDP print, all seemingly water off a duck's back when it comes to Australian dollar performance with the currency inching closer to the $US1.05 level against the greenback.
- Most traders seemed to interpret the RBA’s statement as indicating that the central bank has wielded the axe on rates for the last time in the present cycle, which if true would preserve the AUD’s yield advantage over other currencies for the foreseeable future.
- It would seem traders looked at the RBA statement in the same context as the improving Chinese economic data this week and have put two and two together and come up with 3% being the floor on the Australian interest rate picture looking ahead to 2013.
While Ten is offering new shares at a massive discount, someone is buying Seven West, pushing up shares by as much as 3.7 per cent. They're currently up 0.8 per cent.
Shares accounting for 1.2% of #Seven West, worth around $20m changed hands today. Large trade catching people's attention today#ausbiz
— Brooke Corte (@brookecorte) December 5, 2012
Aussies are frequently told about the weak areas of the economy, so much so that we forget the strengths, CommSec chief economist Craig James notes as car sales hit a new record, and tourists arrival in record numbers:
- Aussie consumers are shy in some ways, bold in others. Certainly cars are being snapped up, and with good reason – car affordability is at record highs.
- The important point for domestic manufacturers is that the demand is there, but the right vehicles need to be produced to capitalise on opportunities.
- Despite the high Aussie dollar, a record number of tourists are coming to Australia, with much of the growth from China and other Asian countries.
- More time and energy needs to be devoted to selling our strengths to prospective tourists. A growing tourism sector acts to diversify income flows to the country away from resources and rural exports.
China's economic growth may quicken to 8.2 per cent in 2013 from an expected 7.7 per cent this year in response to official growth-promoting polices, but downside risk remains from global uncertainties, the Chinese Academy of Social Sciences (CASS) says.
The country's top think tank said in its "blue book" report on China's economy that Beijing should boost budgetary help to the economy by borrowing and spending more, and cutting taxes that hinder economic efficiency.
China has not yet issued an official GDP forecast for 2013, but CASS's status as the premier state-backed centre for academic and policy research means its outlook to a certain extent reflects central government thinking.
"We are cautiously optimistic on the outlook for 2013. We should be alert to possible downside risk and be prepared with enough policies," the think-tank says.
Good time to take a look at how the region's main markets are doing:
- Japan (Nikkei): +0.1%
- Hong Kong: +1.2%
- Shanghai: +3%
- Taiwan: +0.5%
- Korea: +0.5%
- India: +0.5%
- Singapore: +0.4%
- New Zealand: -0.1%
And while we're overseas, Chinese shares are rallying as investors cheer policy comments from new Communist Party chief Xi Jinping, committing to stable economic growth.
The CSI300 of the top Shanghai and Shenzhen listings is up 3.9 per cent, while the Shanghai Composite has added 3 per cent. Today's gains have helped both indexes further rebound from near four-year lows.
Addressing a politburo meeting, Xi said in comments reported late on Tuesday that the government aimed to stabilise exports and make policies more targeted and effective as the world's second-largest economy faced both favourable factors and challenges next year.
Shares in Samsung Electronics extended gains to reach a life-time high of 1.447 million Korean won ($A1,273.74) in recent trade in Seoul, after the electronics giant promoted Jay Y. Lee, the son of its chairman and the anointed heir, to vice-chairman.
The promotion of the snappily-dressed and bespectacled Mr Lee, 44 comes after Samsung marked the 25th anniversary of his father Lee Kun-hee’s chairmanship last week.
The younger Mr Lee will have big shoes to fill as it was under his father’s watch that Samsung Electronics was transformed from a low cost producer into a global player that has overtaken Apple in terms of smartphone sales.
Critics say he lacks his father’s charisma, business insight and entrepreneurship and that he faces tough challenges, not least a patent battle with Apple that is being fought out in courts across the globe.
Shares in Coal of Africa have slumped on the news of a strike at its Mooiplaats colliery in South Africa.
The strike follows the suspension of four workers, the company said in a statement this morning.
The junior coal company said that all four underground sections of the mine had stopped operating and any continued strike action would have a severe impact on the viability of Mooiplaats and could result in job losses.
Shares in the miner have fallen 7.9 per cent - 1½ cents - to 17½ cents.
The tax office has secured a victory against James Packer’s former company Publishing and Broadcasting Ltd – which later became Consolidated Media Holdings – that will see its new owners, News Limited, picking up the tab on a $400 million capital gain.
The tax assessment is expected to be about $4.2 million plus more than $1 million in interest.
The High Court has found the Commissioner of Taxation correctly assessed a $1 billion done in 2002 as a capital gain.
However, the tax bill is not expected to be material to News Ltd, which was aware of the risks when it purchased ConsMedia last month for $1.94 billion.
There's bad news for high-speed traders in a report from the US regulator which found they make money off the back of small investors without taking much risk themselves.
High-frequency trading firms earn large and persistent profits, according to a study by the chief economist at the Commodity Futures Trading Commission the derivatives regulator.
"HFTs derive their profits from fundamental and small investors," Andrei Kirilenko said. "HFT profits increase in aggressiveness."
The report could be a setback for the sector as regulators consider tighter rules.
The nation’s largest cattle producer, Australian Agricultural Company is on track to post a 2.5 per cent increase in sales for the year.
However its earnings are being hurt by weak cattle prices as the company desperately tries to become profitable again following several years of losses.
Its physical performance metrics were tracking well, AACo said, including weather and pasture conditions that supported weight gain and brandings results.
Shop owners have received some good news ahead of Christmas, with data showing the retail services sector expanding for the first time in 12 months.
The Australian Industry Group - Commonwealth Bank Australian Performance of Services Index (PSI) improved in November, rising 4.3 points to 47.1 points.
Even though the overall sector was contracting but at a slower pace, the retail sector showed an expansion. The sub-index for retail services rose 13.6 points to 55.2. It was the first time that sector had been over 50 - the level that separates expansion from contraction - since November 2011.
Australian Industry Group chief executive Innes Willox says the improvement in retail comes at a good time.
‘‘While the sector as a whole remains weak, there are some tentative signs of encouragement, including the lift in retail trade one month out from Christmas,’’ he says.
The latest Network Ten capital raising will give investors more rope with which to hang the embattled broadcaster's board at tomorrow's shareholder meeting, BusinessDay's Colin Kruger writes, but the billionaire directors have one mitigating factor – they are sharing the pain. Really sharing it.
From a peak above $1.50 in November 2010 – soon after James Packer, Lachlan Murdoch, Gina Rinehart and Bruce Gordon finished their buying spree – to a low of the expected 20¢ price for the latest capital raising, the billionaire board members are down more than $560 million.
This does not include losses on the most recent $200 million capital raising at 50¢ a share.
Shareholder advocates and proxy advisors have already armed Ten shareholders with a scathing assessment of the company and recommendations to vote against the company's remuneration report.
UBS has sent out its 2013 global outlook:
- The 2013 global growth outlook is a sub-trend modest outlook that will steadily accelerate in 2014. Global growth forecasts for 2013 and 2014 are 3.0% and 3.4% respectively.
- The core developed OECD economies will continue to grow at a low sub-trend rate vs the long run average for some years to come.
- Importantly, it is about the composition of global growth as the developing economies will continue to be the drivers going forward. This will continue to drive investment returns across the asset classes in 2013.
- Given the current level of global stimulus the growth outlook really needs to be higher to generate strong earnings momentum in 2013.
The November China services PMI has landed and it shows a slowing in services sector growth - down from 53.5 in October to 52.1, but still in expansionary mode:
- Composite data points to strongest rise in output in four months
- Outstanding business at the composite level falls at the fastest pace since January 2009
- Total employment broadly unchanged since October
GDP reaction: Along the lines of Michael Pascoe's earlier mentioned spray, HSBC chief economist Paul Bloxham says the figures show that the government’s push to return the budget to surplus is a drag on the Australian economy:
- Mining investment was still a strong contributor to GDP growth in the quarter, but we’ve seen public demand has fallen quite sharply. So the government’s plans to get back to budget surplus this year are having a contractionary impact on the Australian economy.
- Growth seems fairly uneven across the economy and the signs of rebalancing in the economy are still tentative at this stage.
- But an important thing to keep in mind is given the global backdrop at the time - we had the European financial crisis, we had a slowdown in China’s growth and a sharp fall in commodity prices, you’ve got to think that 0.5 per cent growth in the quarter is still a pretty solid result.
National Australia Bank's internet subsidiary UBank is cutting its UHomeLoan variable interest rate by 20 basis points to 5.27 per cent, effective December 14.
The rate is at the bottom end of comparative offers.
“UBank is able to offer such competitive rates because we are an online bank and have comparatively lower operating costs which we can pass onto customers in the form of great rates,” UBank General Manager Alex Twigg says.
Here's economics correspondent Peter Martin's take on the GDP figures:
Slowing economy points to difficult year ahead
Economic growth moderated during the September quarter, growing by 0.5 per cent. Peter Martin expects growth will slow further next year.
Australia’s mini fiscal cliff seems obvious to everyone except the federal treasurer and his shadow, both pointing everywhere else as they wrestle each other over the edge, Michael Pascoe writes:
It’s printed plainly in today’s national accounts: the 0.5 per cent private sector investment contribution to gross domestic product neatly cancelled out by the minus 0.5 per cent contribution from government sector investment, leaving it to inventories and household consumption (0.3 and 0.2 per cent respectively) to provide the 0.5 per cent bottom line lift for the September quarter.
And Wayne Swan and Joe Hockey both promise further tightening of fiscal policy. With Hockeynomics, it could be a dramatic further tightening, unless there’s dramatic further spending as well – it’s hard to tell from the opposition’s promises to spend more and spend less and tax less, except when taxing more.
Bernie Fraser thinks the government’s pursuit of an immediate surplus is stupid, but it seems to be the only federal bipartisan goal.
Another reaction: the Australian economy has been running at below trend rates over the six months and households remain cautious, ANZ says in its take on today’s GDP numbers:
- Mining activity still appears to be the key driver of real GDP growth (on the expenditure side) although there were some signs of a pick up in dwelling investment.
- Meanwhile lower national income growth owing to the falling terms of trade and soft profitability will continue to weigh on business confidence and the outlook for business investment and employment.
- In terms of monetary policy, today’s data are somewhat backward looking and provide limited guidance on whether recent rate cuts will be enough to encourage a sufficient pickup in non-mining drivers of economic growth.
- While the RBA will retain an easing bias next year, much will depend on the path of the currency and trends in the unemployment rate which is expected to edge higher from here.
- Labour force data (tomorrow) and trends in job advertisements remain critical.
The main surprises in the data, according to ANZ:
- Softer household consumption which increased just 0.3% q/q, suggesting that consumers remain cautious and are not (as yet) responding to the lower rate environment. The household savings ratio fell only slightly to 10.6%.
- Business investment surprised on the upside owing to a sharp rise in machinery & equipment. However non-dwelling construction declined again.
More reaction to GDP: a small bit of the puzzle is in place for a rate cut in February but not the whole thing just yet, says UBS interest rate strategist Matthew Johnson:
- A recession? You can never say never. I guess the increase in inventories is not desirable but I can't see a recession forming in the data.
- It is the case that nominal GDP is growing very slowly. If that continues we'll have a year where times are pretty tough but it's not yet clear that it's going turn any worst than tough times.
It's not all doom and gloom in the economy, or even among consumers: sales of new vehicles were up a brisk 10.9 per cent in November from a year earlier, industry data shows, with consumers still ready to splash out on big ticket items despite being cost concious elsewhere.
The Australian Federal Chamber of Automotive Industries VFACTS report showed total vehicle sales in November were 98,347, compared to 88,654 in the same month last year. Sales were up 2.9 per cent on October, while in seasonally adjusted terms the increase was 0.1 per cent. For the 11 months to November, sales were running at 1.02 million, up 9.8 per cent on the same period last year.
Sales of sport utility vehicles finally started to slow somewhat after a meteoric rise, but were still up 8.1 per cent on November last year. The light commercial market was also strong with a rise of 15 per cent and the heavy truck market enjoyed a jump of 19.7 percent, pointing to solid business investment.
The strength of vehicle sales has been in stark contrast with softness seen in retail spending, with consumers perhaps attracted by low interest rates on car loans.
A reader has just alerted us to the drop in QBE shares, which sank as much as 5.5 per cent this morning - a sizeable drop for a $12.3 billion company. Shares are now down 3.7 per cent. We're looking into it but let us know if you have an explanation for the drop.
The nation’s second largest oil and gas producer Santos has cut 100 jobs from its South Australian operations.
Redundancies will begin in the first quarter of 2013. Those affected are based in the company’s Adelaide head office and its Moomba operations in the Cooper Basin.
Santos said the affected roles were not going to meet the needs of the business in the coming years. Those needs include the next stage of its natural gas development in the Cooper Basin, based around in-fill drilling and shale gas.
Santos shares are down 1.2 per cent.
And here’s BusinessDay's Mal Maiden on the GDP numbers:
GDP for September, as expected, but it's all about 2013 now, when the nmining boom fades
— Mal Maiden (@Journo55) December 5, 2012
In company news in between the GDP updates, Consolidated Media, James Packer’s pay television business acquired by News Corp last month, has lost a dispute with the Australian Tax Office over a $1 billion share buyback in 2002.
The High Court today overturned a federal appeal court ruling which said the proceeds Consolidated Media received from its Crown Melbourne casino unit were a dividend.
The Commissioner of Taxation argued it was a capital gain, which is taxable at the corporate rate rather than a dividend that provides a rebate to companies under the code. Consolidated Media Holdings had a capital gain of $402,461,564 as a result of the share buyback, according to the tax office.
The rebate provided from the dividend resulted in Consolidated Media not having to pay tax in 2002, according to court records.
Consolidated Media, then known as Publishing and Broadcasting Ltd, owned all the shares in Crown in 2002. The casino decided to buy 29 percent of the stock from its parent in an off-market transaction.
First reactions by economists on the GDP numbers are coming in. Macquarie senior economist Brian Redican says the strength of the mining sector is tiding Australia over for the moment, but the economy is likely to weaken in the months ahead:
- This is a fairly sluggish rate of growth, even with mining investment adding to growth, and before the major fiscal cutbacks begin to come through.
- Those cuts are starting to have an impact, but a negative impact, particularly from mining, is just going to get larger through 2013.
- Rate cuts from the Reserve Bank of Australia could provide some relief, but previous rate cuts have taken a long time to filter through the economy.
A couple of first reactions to the GDP numbers, on Twitter:
GDP 0.5% qoq + 3.1% yoy for Australia-not brilliant but not terrible either #AUD looking bullet proof against #USD v #JPY I like it lower
- @gregorymckenna
Good productivity data; GDP per hour worked rising solidly
- @TheKouk (Stephen Koukoulas)
Real GDP per capita flat in Sept quarter. Disp income per capita fell by -1.1% on falling commodity prices. Here comes the income shock.
- @leithvo (Leith van Onselen)
Some other stats out of the GDP release:
- Real GDP per capita flat in the quarter
- Disposable income down 1.1 per cent in quarter
- Household saving at 10.6 per cent in Q3
- GDP deflator down 2 per cent over the year
- Terms of trade down 4 per cent in the quarter
The dollar has hardly budged on the news, trading at $US1.0475. The ASX200 has lost a couple of points, but again not much.
Third-quarter economic growth figures are out: GDP grew 0.5 per cent in the quarter and 3.1 per cent over the year. That just about matches expectations of 0.6% growth qoq and 3.1% yoy.
Getting ready now for the GDP numbers. The dollar is at $US1.0477.
Iron ore miner Sundance has plunged as much as 14 per cent after it said its takeover by Hanlong would be delayed to the end of January because the Chinese company has not yet obtained the necessary funding.
The deal had been due to close on January 8.
Shares have bounced back from a soft start, pulled up by banks and miner Rio Tinto in restrained trade ahead of economic growth data out at 11.30am.
Gross domestic product is expected to have increased 0.6 per cent in the quarter, and 3.1 per cent for the year, down from 3.7 per cent in the second quarter.
"Equity valuations remain compelling on most measures," says UBS strategist George Boubouras.
"We continue to recommend a combination of quality defensives with a dividend strategy for conservative portfolios, through to increased exposure towards cyclicals for a more aggressive risk appetite."
As some context to the announcement of a $225 million capital raising by Ten, here's a chart showing the broadcaster's shares price since mid last year. It doesn't make for very pleasant viewing for the moguls, mining and otherwise, who recently bought into the company.
As we note here, in June Ten asked its major shareholders, including its cluster of moguls, to put their hands in their pockets and help the No. 3 TV network to raise $200 million to pay down debt and give it the "flexibility" it needed to deal with an "uncertain" ad market.
Mr Packer, Ms Rinehart and Mr Murdoch all took up their entitlement of shares, which were offered at a 20 per cent discount to the then price of 64 cents. Prior to today's trading halt, its shares were at 32.5 cents. Here's the chart:
The benchmark ASX200 is in a positive mood after the first hour of trade - it's more than 0.3 per cent higher now after dipping just after the opening bell rang.
The online travel company Wotif has hired Scott Blume, an executive with decade-long experience in the tourism industry in Asia, to replace Robbie Cooke as chief executive.
In a signal that it intends to ramp up its online business in the Asia-Pacific region, Wotif described its new chief executive as a ‘‘seasoned CEO with travel sector experience both within Australia and Asia’’.
Mr Blume has spent 10 years working in Singapore, India, and Indonesia, which has included time as president of online travel agency Travelocity and chief executive of Zuji. His latest role has been as chief executive of the Indonesian RKI Group.
The ASX200 is now 0.2 per cent higher. Looking at the best performed companies on the benchmark index:
- Ausdrill: +3.37%
- Perpetual: +3.24
- Discovery Metals: +3.18%
- Cabcharge: +3.03%
- Seven West Media: +2.79%
- Flight Centre: +2.6%
- Myer: +2.35%
Here’s an interesting view on why yesterday’s interest rate cut, although it took rates to GFC levels, was not a move to an "emergency" footing. This was posted by 'House and Holes' on the Macrobusiness blog:
Interest rates are not at an “emergency low”. We are not in an emergency. That this cycle is different to that which transpired in 2009 is obvious. Fiscal policy is completely different, the global and local economy’s are completely different and consumer behaviour is also different. Aside from anything else, owing to wider spreads, actual mortgage rates are still 50-60bps above GFC lows.
Looking at blue chips, there's a positive tone in early trade across sectors with most of the big miners, banks and retailers all showing early gains:
- BHP: +0.26%
- Rio: +1.1%
- CBA: +0.4%
- NAB: +0.16%
- Woolies: +0.31%
- Wesfarmers: +0.25%
- Myer: +2.35%
- Telstra: +0.58%
- Qantas: +0.76%
Sector by sector on the ASX200:
- Telecoms: +0.53%
- Utilities: + 0.44%
- Financials: +0.35%
- Industrials: +0.3
- Info tech: -1.1%
- Health: -0.48%
- Materials: -0.26%
The Australian share market is marginally higher ahead of the release of economic growth figures.
The benchmark S&P/ASX200 index was up 3.8 points, or 0.1 per cent, at 4507.4, while the broader All Ordinaries index was up 3.5 points, or 0.08 per cent, at 4,515.3.
On the ASX 24, the December share price index futures contract was 11 points higher at 4,516 with 6,164 contracts traded.
More on NAB. Only two banks announced their response to the RBA’s decision to cut the cash rate by 25 basis points yesterday. The Bank of Queensland passed on 0.20 points and ING Direct passed on the full 0.25 points.
It could trigger a series of announcements from NAB's competitors, except for ANZ which will announce its decision on Friday next week.
‘‘(The banks) are sitting there at the moment desperately wishing their competitors show their hand first so they can undercut,’’ Australian Bankers Association (ABA) chief executive Steve Munchenberg told the ABC this morning.
More on NAB. Personal banking executive Lisa Gray said the bank’s cost of funding was still high.
‘‘The impact of deposit and wholesale funding costs remain high, resulting from instability in the global economy and low confidence domestically,’’ she said in a statement.
NAB has promised to offer the lowest standard variable home loan rate of the big four banks until the end of 2012. Commonwealth Bank and ANZ would now have to cut their rates by at least 23 basis points to offer a lower standard variable rate than NAB.
Early take - markets are down about 0.1 per cent without all companies trading.
BREAKING NAB has cut rates by 20 basis points. That's the first of the big banks to move after yesterday's rates decision.
IG Markets analyst Cameron Peacock has some thoughts on why markets dipped yesterday after the RBA announced its rates decision. He notes that the ASX fell from from -0.2% to -0.6%. Why?
Part of that was due to the retailers which you’d think would have been among the biggest beneficiaries of a cut. Myer and David Jones were up close to 5% and 2% respectively before the cut, yet finished flat.
Maybe the market figured (or realised) the flow-through effects of a December rate cut will be too late to influence the Christmas shopping period ... That’s why we suggested heading into the November RBA decision that an earlier cut would have been more beneficial to the consumer and thus the economy.
There’s some good news for retailers in this morning’s services sector PSI. In a note, CBA economist John Peters points out:
The retail trade sub-sector expanded for the first time in close to twelve months in November. It lifted by a significant 13.6 points to 55.2. This is an encouraging, albeit tentative sign, ahead of retailers’ peak Christmas trading period. Health & community services activity jumped 12.4 points to 51.6, and finance & insurance increased by 3.4 points to 69.7.
We could be looking at a down open after all, says one analyst:
US stock futures have drifted lower after the physical close. Real chance now the #XJO could open modestly in the red #stocks #ausbiz
— David Scutt (@David_Scutt) December 4, 2012
Some analyst rating changes from late yesterday:
- M2 Communications rated new neutral at CIMB
- Metcash cut to equal-weight from overweight at Morgan Stanley
- Metcash raised to outperform from neutral at Credit Suisse
- Fleetwood cut to underweight from neutral at JPMorgan
- Domino's Pizza cut at E.L. & C Baillieu
- iiNet rated new buy at Citigroup
- Transurban rated new neutral at Nomura
The services sector remains weak despite a slight monthly improvement, but there is some good news for retailers. The Australian Industry Group and Commonwealth Bank Australian performance of services index (PSI) improved in November, rising 4.3 points from October to 47.1.
But the index is still in contractionary territory, with a reading below 50.The data included an encouraging sign for the retail sector, which rose 13.6 points to 55.2 in November - showing expansion for the first time in 12 months.
Australian Industry Group chief executive Innes Willox said a rise in retail was promising in the lead up to Christmas.
‘‘While the sector as a whole remains weak, there are some tentative signs of encouragement including the lift in retail trade one month out from Christmas,’’ he said in a statement. But Mr Willox said the overall results showed Australians remain cautious with their spending.
In major corporate news this morning, Ten Network shares have gone into a trading halt as the struggling free-to-air broadcaster prepares to raise new funds.
The trading halt was requested by the company ‘‘pending an announcement by Ten in relation to a proposed capital raising and other initiatives’’, it said in a statement to the ASX today.
It has been reported Ten would seek to raise $225 million by issuing new shares at about 20 cents per share. Ten shares closed Tuesday’s local trading session at 32.5 cents. A new capital raising venture would be Ten’s second in just six months, after it raised $200 million in June.
In economics news today we get third quarter GDP data from the ABS at 11.30am. A Bloomberg survey expects the economy to have expanded by 0.6 per cent in the three months to the end of September, but growth is expected to have moderated over the year - from 3.7 per cent to 3.1 per cent.
Heading into what many are predicting will be a downbeat 2013, it'll be interesting how the reading stacks up with expectations. Full coverage here when the data arrives.
The Aussie dollar has not suffered a hangover following yesterday's rates decision. It got close to $US1.049 early today and was trading at $US1.047 a short time ago.
BusinessDay's Clancy Yeates writes that the jump in the dollar came because some investors had expected a larger 50 basis point move and RBA governor Glenn Stevens had failed to give the market a clear signal about whether further cuts were planned, analysts said. Here's Clancy Yeates on the dollar. And here's this morning's dollar story.
Fiscal cliff worries have again weighed on investor sentiment in offshore trade overnight. Wall Street slipped, but not far, and Europe was positive but not exuberantly so. While the futures market and the dollar suggest a small gain at the open, local shares are likely to get off to a cautious start.
For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key markets number:
- SPI futures are 7 points higher at 4512
- The $A is higher at $US1.0476
- In the US, the S&P500 was 0.17% lower at 1407.05
- In Europe, the FTSE100 fell 0.08% to 5869.04
- China iron ore added $US1.80 to $US117.10 a metric tonne
- Gold rose $1.50 to $US1695.45 an ounce
- WTI crude oil fell 29 cents to $US88.80 a barrel
- Reuters/Jefferies CRB index was flat at 300.26
Good morning folks. Welcome to the Markets Live blog for Wednesday.
Contributors: Thomas Hunter, Jens Meyer, Richard Hughes, Max Mason
This blog is not intended as investment advice
BusinessDay with agencies
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