Markets Live: Shares finish month strong

3.55pm: With minutes to go before the close of trade, here's what CMC Markets sales trader Ben Taylor had to say about the day's action:

• The markets are awash with confidence as central bank action is believed to pave the way for a u-turn in the long suffering markets.
• A Federal Reserve policy meeting on Wednesday is expected to reiterate it’s “we stand ready” talk and holds the potential to flag fresh stimulus.
• The European Central Bank policy meeting on Thursday is expected to spell out the way forward following Mario Draghi’s vow to do whatever it takes. It’s likely that the ECB will resume purchasing Eurozone bonds in coordination with the ESM.
• With expectations running high any failings will be met with decisive selling. However if we see both central banks coming to the party get ready for one hell of a ride.
• The renewed strength of the Australian banks is the main driver behind the recent gains. Yield chasing and the banks defensive attributes have proved a perfect match for investors looking to get exposure into the Aussie market.

3.49pm: Here's a snapshot of how markets around the region are performing:

• Nikkei(Japan): +1.05%
• Shanghai: +0.03%
• Taiwan: +1.56%
• South Korea: +2.58%
• Singapore: -0.2%
• New Zealand: +0.74%

3.41pm: Olympic gold medal swimmer Kieren Perkins has been appointed state manager Queensland for NAB’s Private Wealth unit.

Perkins, who won gold medals in the 1500 metres at the Barcelona and Atlanta Olympics and silver in Sydney, was previously head of private clients and business development for NAB Private Wealth in Queensland.

3.30pm: The wave of rationalisation that is starting to emerge among the major diversified miners will soon spread to the gold sector, as soaring costs and labour shortages begin to squeeze margins.

That warning from Nick Holland, the head of South African miner Gold Fields Limited, came this afternoon as the world's fourth biggest gold company addressed the Melbourne Mining Club.

Mr Holland criticised fellow gold producers for failing to include corporate and capital costs when publicising their profit margins, saying they were only fooling themselves and governments, who would duly seek to tap the industry for more taxes.

Read more here.

3.18pm: Talk of a two speed economy in Australia is damaging, says NAB CEO Cameron Clyne.

Mr Clyne has told an American Chamber of Commerce in Australia luncheon that Australia was more like a 10-speed economy.

He says describing the economy as having two speeds was hurting confidence.

‘‘Part of the problem with this constant reference to two speeds is that people feel that if they are not in the express lane, they’re going backwards, which is not the case,’’ Mr Clyne says.

3.11pm: Here’s another story from our small business section. These two gurus are selling 200 million online ads a day.

3.04pm: The Transport Workers Union has called for the corporate watchdog to investigate whether Qantas and Jetstar broke any laws following rumours of potential deals with other airlines.

TWU national national secretary Tony Sheldon says Qantas and Jetstar may have been manipulating and flouting corporations law by fuelling rumours of a deal with Emirates Airline and talk of an Asian-based premium airline called Red Q.

Mr Sheldon says Qantas has also made announcements about setting up airlines in Singapore and Malaysia that had not come to fruition.

2.55pm: Higher commodity prices have driven a three per cent rise in Origin Energy’s full-year revenue, despite lower production of gas.

Origin’s revenue for the year to June 30 was $856 million, up from $834.9 million in the previous corresponding year, it said says.

Production in the year to June was down four per cent from the previous corresponding period, and sales volume dropped seven per cent.

2.44pm:Asian stocks are up across the region. As Bloomberg notes, the growth issue is not just a US and European one:

The US Federal Reserve and the European Central Bank meet this week as the International Monetary Fund said Europe’s debt crisis is likely to be prolonged, Bloomberg said.

Reports today showed South Korea’s industrial production fell for the first time in three months, Taiwan’s gross domestic product unexpectedly shrank, while Japanese household spending increased less than economists estimated.

“The data is a confirmation of the slowdown we had anticipated,” said Chu Moon Sung, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management, which oversees about $26 billion.

“Bets on stimulus measures and policy cooperation by key global economies are continuing to aid sentiment. We can sense more active rhetoric by policy makers to resolve Europe’s debt crisis.”

2.34pm:Meanwhile, in a tale heading in a different direction, Larissa Ham of Small Business takes a look at fashion labels with a humanitarian edge. Here's a taste:

The insider trading investigation into Hanlong Mining executives has taken a scalp, with Hanlong's former vice president, Calvin Bo Shi Zhu, pleading guilty to charges relating to serial insider trading dating back to 2006.

The plea comes at a difficult time for Hanlong's takeover bid for the listed Australian miner Sundance Resources, with China's National Development and Reform Commission scheduled to make a decision this week on whether it will approve the $1.65 billion bid.

The longer tale can be read here.

BusinessDay's Leonie Lamont has also filed this background piece:

Calvin Zhu was a migrant success story - arriving in Australia with his family as a 10-year-old - a university education in finance, and then by the age of 30 holding the lofty title of executive vice-president with Hanlong Mining.

But once the Australian Securities and Investments Commission surveillance team detected suspect trading in Bannerman Resources and Sundance Resources, both takeover targets of Hanlong, Zhu lost his job, was unemployed and, in his own words, suffered "irreparable damage" to his professional reputation.

Also worth having a look at the longer version here.

2.14pm:Among the sub-indexes, the leading one in July so far is the telecom index - which is basically Telstra. It's up about 8.2% so far.

Significantly, materials (think BHP, Fortescue, Iluka) is the only sub-index off for the month, but only 0.3% lower at this point.

Consumer staples are up 7.6% (think Wesfarmers, Woolies); financials up 7.1% (just about every bank up); and energy stocks are up 3%.

2.05pm: Among the notable stocks, July has seen these gainers so far:
Billabong 26%
Beach Energy 16%
Australand 15%
Bank of Queensland 14%
Boral up 13.7%

Biggest losers include:
Intrepid Mines 57%
Linc Energy 23%
APN 19%
Boart Longyear 19%
Iluka 17%

1.58pm: Of the 186 points or so added to the ASX200 so far in July, the biggest contributors are:

CBA 31/186, or one-fifth of the gain;
WBC 28
ANZ 24
TLS 16
Wesfarmers 15
NAB 13

Biggest drags on the market (in index points):
Rio 6
Fortescue 5.6
Iluka 3.4
Macquarie Group 1.6

1.53pm: As we're a couple of hours from the end of the trading month, here are some numbers of note:

At current levels, the ASX200 is up 4.5%, the best monthly gain since the 5.1% advance in January.

It's also the sixth monthly gain in seven months - not bad given the global uncertainty. Trouble is that the losing month - May - saw shares shed 7.3%

1.45pm: Gold, meanwhile, edged up ahead of the US Federal Reserve's policy meeting later in the day, which is expected to shed light on the bank's stance on monetary stimulus, a key factor driving bullion prices, as Reuters reports.

Besides the Fed meeting, the European Central Bank will hold its policy meeting on Thursday, under pressure from investor expectations of immediate action after its chief, Mario Draghi, vowed last week to do anything within the bank's mandate to preserve the single currency.

"Gold may come under some pressure in the run-up to this week's central bank meetings with the possibility of a dip below $US1,610, but direction will depend almost entirely on policy decisions," said ANZ in a research note.

More quantitative easing, or cash-printing, by central banks will raise the inflation outlook and drive investors to buy gold, seen as a good hedge against rising prices.

Spot gold inched up 0.2 per cent to $US1,623.56 an ounce.

1.10pm: While the Aussie is close to four-month highs against the greenback, Reuters reports that it is close to posting its biggest monthly advance against the euro since the euro was launched 13 years ago.

We've still got the rest of today to go, of course, but the Aussie has added 5.5 per cent against the euro this month. It was recently buying 85.68 euro cents.

1.01pm: RBS Morgans client adviser Stephen Pill said the ASX200 was at an 11-week high of 4,283 points - the highest since mid-May.

‘‘The main diver of that has been the renewed strength in the banks,’’ Mr Pill said. There had also been a rotation back into resources stocks, he said, with mining giants Rio Tinto and BHP up around 1.5 per cent.

12.51pm: The dollar continues to creep higher, touching 66.92 pence in recent trade - looks like the highest since mid-March.

It's also buying 85.7 euro cents after touching what looks like a record 85.82 euro cents.

And it's at a four-month high of 105.2 US cents and 82.3 yen.

12.40pm: Change of pace, but nothing like mixing business and sport at this time:

$2m win for businessman Michael Klim - from our Small Business team.

12.22pm: Big miners are up, along with the material sub-index, with the latter up about 1.1% of the day. Energy stocks (think Mid East tension) are 1.6% while financials are up 0.4%.

BHP is up 1.2%, Rio 1.3% and even Fortescue 1.9%. Still, the comments from China today aren't very positive for iron ore miners.

Iron ore prices are still abnormally high compared with steel products, an official with the China Iron & Steel Association (CISA) said on Tuesday, Reuters reports.

Financing costs for the association's members, comprising 78-80 medium and large-sized steel mills, rose 37 per cent in the first half of this year from a year earlier, Zhang Changfu, CISA's vice chairman told reporters in Beijing.

Zhang said credit was not only expensive but also hard to obtain for steel mills.

12.16pm: Media stocks are among the most shorted, and have been for a while.

Ten Network is off 4% for the day, placing it among the five worst performers on the ASX200. Its 'short interest' is about 7.7%.

Fairfax Media (publisher of this blog) is down about 1.5 cents to 52.5 cents in recent trade (close to a record low 52 cents.) Some 16% of Fairfax stock is 'short interest.'

12.10pm: Interesting, by the way, to see that investors aren't betting either of the two big stocks will stage a retreat.

Just 0.27% of Telstra shares held as 'short interest', and 2.2% for CBA.

12.07pm: Couple of morsels:

CBA touched a fresh 26-month high today of $58.05, before easing back to traded at $57.70 - still up 50 cents for the day.

The stock is up 17% for 2012.

Telstra, meanwhile, is up even more in 2012 - almost 20% at this point.

The widely held stock also touched a fresh high of $4.01 today - before easing back to be flat at $3.98.

12.05pm: ASX200 powering its way into the afternoon, and well on course for a fourth straight day of gains (longest winning streak since the start of July.)

11.43am: The ABS has also released building approvals for June, and the housing sector received a modicum of good news with approvals falling less than expected in June.

Building approvals dropped 2.5 per cent in June, following a 27 per cent surge in the previous month, the ABS said. Economists tipped a 15 per cent drop in June.

In the year to June, building approvals increased 10.2 per cent, defying economists' predictions of a 5.5 per cent drop in that time, according to Bloomberg. In the year to May, building approvals rose 9.1 per cent rise.

11.37am: The ABS has released the private sector credit data for June and it is in line with expectations. Private lending for June rose 0.3 per cent, slightly off the 0.4 per cent forecast by a Bloomberg survey of economists. It is weaker than the May, which came in at 0.5 per cent.

For the year, private borrowing grew 4.4 per cent, up slightly from a 4 per cent reading a month earlier.

11.30am: Coles continued. Mr McLeod warned that big-box retailers such as Costco were major competitive threats.

“Relative to the international scale of these operations, they might only have what might be perceived to be a few stores at the moment in Australia but they have deep pockets and they will continue to invest in this country and they’ll continue to increase competition which can only be good for the consumer.

“We have to be alive to that and raising our game all the time to make sure we maintain a competitive position in this marketplace.”

Mr McLeod said the company was in the final year of its “turnaround” and was looking to change its store format and enter new categories domestically. But he ruled out expanding internationally to general merchandise stores and into hyper-markets.

“It’s quite hard to pick retailers that have managed to go out of their home base and succeed internationally at this stage of our development, I believe that would be the wrong thing to do.”

11.27am: Macquarie Telecom now expects to earn about $40.6 million before tax in the 2011-12 financial year, up from previous guidance of between $36 million and $38 million, according to an earnings guidance upgrade based on unaudited management accounts.

It expects to report it had no debt and about $31 million in cash or cash equivalents on June 30 at full year results on August 23.

A second data-centre has been commissioned and anchor tenant News Limited is moving its data storage to this new facility, Macquarie Telecom announced today.

11.23am: More from Coles boss Ian McLeod. Mr McLeod said the company was trying to increase the number of its Coles-brand products that were produced wholly in Australia through co-investment plans with suppliers, including Melbourne bakeries.

“Half our cheese supply was from New Zealand, we’ve brought that back into Australia so it’s 100% Australian-made … Coles yoghurt will all come from Tasmania. A new plant has been built there.”

He said Coles had 3 million more customers a week than when the “turnaround” campaign began four years ago.

11.16pm: Markets are now back to gains of about 0.2 per cent. By a big margin, voters in today's poll foreacst the ASX200 would close flat to 0.5 per cent higher. We're thereabouts now, and we've got building approvals for June and private sector credit for June due at 11.30am.

11.07am: Some exclusive reporting here for the Markets Live from BusinessDay journalist Jane Lee, who listened to Coles chief Ian McLeod speaking at the Australian British Chamber of Commerce in Melbourne.

She reports that Mr McLeod rejected criticism that Coles’ imports, which helped it keep prices low, were “single-handedly undermining and destroying Australian agriculture and the Australian dairy industry.”

The supermarket giant aimed to buy Australian produce first and was working with Australian farmers to develop products, he said.

“We always go for Australia first and we always look to have that when it’s available. That’s our ethos and our game plan.

“Australia does fantastic prawns ... but the price of Australian prawns is anything north of $20 a kilo. A lot of Australians shopping on a budget can’t afford that so we’ll introduce prawns from Vietnam which are around about $14 a kilo. It’s giving choice to the consumer.

“We’re not preaching to them about what they should and shouldn’t buy. What we are doing is giving them choice in terms of value proposition.”

11.01am: The banks were at the forefront of the charge higher early today but have since eased. The CBA climbed as high as 1.2 per cent higher but has now halved that gain:

• CBA is 0.6% higher to $57.53
• ANZ is 0.17% lower to $23.36
• NAB is 0.5% higher to $24.73
• Westpac is 0.34% lower to $23.18

10.57am: Shares are now off their early high and slipping. After touching a gain of 0.5 per cent, stocks have eased to about 0.3 per cent higher.

10.43am: The big miners are having a positive morning:

• BHP is 0.76% higher to $31.87
• Rio is 0.59% higher to $52.61
• Fortescue is 0.73% higher to $4.12

10.38am: Markets are now pushing toward a half a per cent gain for the day. The All Ords is 0.4 per cent higher and the ASX200 is has just reached a gain of 0.5 per cent.

10.35am: Just to put today's trade into some sort of context, the ASX200 is poised to end July with a 3.7 per cent gain for the month, the best return since January and the third best monthly return since September 2010.

10.32am: Grocery wholesaler Metcash has paid $46.5 million to take complete ownership of hardware chain Mitre 10.

Metcash has held a 50.1 per cent stake in Mitre 10 for more than two years, and in June said it would take full control of the chain if Mitre 10’s financial performance in the year to June 30 met expectations.

On Tuesday, Metcash said it had acquired the remaining 49.9 per cent stake in Mitre 10, which includes more than 400 Mitre 10 and True Value stores, plus distribution to another 400 non-branded independent hardware stories.

10.30am: And the early sliders on the ASX200:

• GUD Holdings: -4.44%
• Ramelius Resources: -3.96%
• Navitas: -3.61%
• Energy World Corp: -3.12%
• Whitehaven: -3.02%

10.28am: To the early gainers on the ASX200:

• Integra Mining: +4.76%
• Linc Energy: +3.13%
• AWE Ltd: +3.09%
• Beach Energy: +2.8%
• Aquila Resources: +2.48%

10.25am: The environmental authority supports Aquila Resources’ proposed port for its $6 billion iron ore project in Western Australia’s Pilbara region.

The coal producer wants to move into iron ore and has developed proposals for two key mines in the Pilbara. Integral to the project, in which Aquila holds a 50 per cent interest, is a proposed Anketell Port development.

The Environmental Protection Authority (EPA) had recommended the West Australian government approve the project, Aquila said today.

10.23am: Two sub indices on the ASX200 are in the red so far:

• Health: -0.11%
• Consumer discretionary: -0.28%

10.20am: Looking at how the sub indices on the ASX200 are performing:

• Energy: +0.77%
• Materials: +0.62%
• Telecom: +0.4%
• Info tech: +0.4%
• Utilities: +0.36

10.15am: Both the ASX200 and the All Ords are modestly higher early. In early trade, the All Ordinaries index is 7.3 points higher, or 0.2 per cent, to 4274.2, while the benchmark S&P/ASX200 is 8.3 points higher, or 0.2 per cent, to 4254.

10.06am: Early take - shares are moving higher as markets open. Up about 0.1 per cent in steady trade.

9.57am: Ric Spooner, chief market analyst at CMC Markets, expects a quiet day of trading as investors await central banks announcements.

‘‘Australian markets are sitting at technical resistance levels as they position for Thursday’s meeting,’’ said Mr Spooner.

‘‘The S&P/ASX 200 index is currently being contained by resistance represented by the bottom of the March/April tracing range.

‘‘Bold announcements by the ECB are likely to see markets break through this resistance while a disappointing result will see prices retreat back into recent ranges.’’

9.53am: Here's some analysis from Rod Myer on Bendigo and Adelaide bank shares. He says the business is an interesting proposition for investors.

9.50am: Australian bond futures prices are slightly higher as bond markets go into a holding pattern ahead of the meetings of the central banks of Europe, England and the US later in the week.

Westpac global head of interest rate strategy Russell Jones said the focus for bond markets was very much overseas at the moment.

‘‘I think you’re not going to see much movement in the next session or two frankly,’’ he said. ‘‘The markets really went into a holding pattern in the US last night and I’d be surprised to see us breaking out of the current range in the next day or two.’’

At 8.30am AEST the September 10-year bond futures contract was trading at 97.025 (implying a yield of 2.975 per cent), up from 96.970 (3.030 per cent) on Monday. The September three-year bond futures contract was at 97.500 (2.500 per cent), up from 97.450 (2.550 per cent).

9.45am: Oil refiner Caltex Australia plans to raise $300 million through capital markets to help fund changes to its operations.

Caltex on Tuesday said it would issue subordinated notes, priced at $100 each, to retail and institutional investors to raise the funds.

"The notes represent Caltex's first retail targeted capital markets transaction since listing on the ASX, and provides investors with a new investment opportunity in Caltex," chief financial officer Simon Hepworth said in a statement. Full story.

9.41am: The Aussie dollar has had another strong night, topping $US1.05 and hitting a fresh record against the euro. The Aussie reached $US1.0507, the highest level since late March. And it reached 85.7 euro cents, the highest level since the euro launched in 1999.

IG Markets strategist Stan Shamu says demand for high-yielding currencies like the Aussie dollar had accelerated in the past few weeks.

“There was a big run up to this week where we were expecting some measures by European leaders to come up with a solution. It does generally seem like after the big run we’ve had we could see a little bit of consolidation ahead of the actual announcements,” he said.

Mr Shamu said local economic data released this week would be overshadowed by central bank meetings and China’s PMI data, which often had a large impact on the dollar’s movement.

“It looks like we’ll have a binary event whereby markets will extend their gains – everyone’s happy with what leaders come up with – or markets could just completely retreat and give up some of these gains if investors are disappointed by the outcome.”

He forecast the dollar to reach up to US$1.08 at March levels if it continued its rally, and to fall down to $US1.02 in light of a disappointing outcome in Europe.

9.37am: Locally, we've got a couple of releases from the ABS later this morning:

• Australian Bureau of Statistics (ABS) building approvals for June
• ABS private sector credit for June

9.35am: On global markets overnight, it was all about the three key central bank meetings scheduled for this week. In Europe, markets were stronger following a weekend of promises on action to fight the eurozone's debt problems. US markets were circumspect, closing flat. Investors on both sides of the Atlantic were mindful of the Fed's meeting, kicking off Tuesday local time, and the ECB meeting on Thursday, local time.

9.32am: For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:

• The SPI was 6 points higher at 4214
  
• The $A was trading at $US1.05
  
• In the US, the S&P500 was flat at 1385.2
  
• In Europe, the FTSE100 added 1.18% to 5693.63
  
• Gold added 56 US cents to $US1623.4 an ounce
  
• WTI crude oil lost $US35 US cents to $US89.78 a barrel
  
• RJ/CRB commodities index 0.97% to 302.5

9.30am: Good morning all. Welcome to the Markets Live blog for Tuesday.

This blog is not intended as investment advice

BusinessDay with agencies