Markets Live: Shares rally behind miners
Economists near unanimous on interest rates
BusinessDay reporter Chris Zappone takes a look at the leading factors influencing the RBA's cash-rate decision.
Australian shares close higher after US and European markets rallied following better-than-expected US jobs figures and a more positive view of the European Central Bank's (ECB) stand on the eurozone debt crisis.
4.50pm: That's all from us here at blog central, thanks for reading and commenting. We'll be back tomorrow from 9.30am.
4.47pm: The gains today took the ASX200 to its highest close since May 14.
4.33pm: Britain's FTSE 100 index is seen opening 1 to 2 points lower, or down just 0.05 per cent, according to financial bookmakers, as markets digested Friday's upbeat US data and the fallout of a European Central Bank meeting last week.
Futures for Euro STOXX 50, for Germany's DAX and for France's CAC were up 0.2-0.4 per cent.
4.28pm: Here's a quick look at how blue chip stocks performed today:
- BHP: +2.24%
- Rio: +4.1%
- ANZ: +0.94%
- CBA: +0.72%
- NAB: +0.68%
- Westpac: +0.64%
- Fortesque: +1.9%
- Woolworths: +0.8%
- Wesfarmers: +1.06%
- Telstra: +1.24%
4.22pm: The future of the controversial Tasmanian pulp mill project planned by Gunns has been thrown into doubt with the company admits its board has has been unable to reach the conclusion it is ‘‘probable to proceed’’.
In a statement to the stock exchange, Gunns said plunging woodchip prices meant it would take an impairment for the year to the end of June of between $700 million and $800 — at least five times its last available market capitalisation.
The impairment will leave the company in the red when it comes to net tangible assets, which it said will be between negative $50 million and negative $150 million.
4.15pm: All the sub-indexes saw gains today with the materials sub-index leading, up 2.4 per cent, followed by gold, which jumped 1.7 per cent. Industrials gained 1.6 per cent and telecommunications added 1.3 per cent.
4.12pm: The market has closed higher. The benchmark S&P/ASX200 index jumped 51.1 points, or 1.2 per cent, to 4272.6, while the broader All Ords climbed 49.9 points, or 1.2 per cent, to 4292.9.
3.58pm: Brent crude dropped toward $US108 a barrel today as a recent surge in prices gave some investors a chance to sell their holdings for profit.
Oil prices jumped on Friday on better US jobs data and talk of stimulus measures by the eurozone to support growth. Supply disruptions in the North Sea and the Middle East also aided prices although Sudanese crude exports could resume soon as Sudan and South Sudan reached a deal on oil transit fees.
Brent crude fell 31 cents to $US108.63 a barrel after jumping nearly 3 per cent on Friday. US crude edged down 12 cents to $US91.28 after surging close to 5 per cent in the previous session.
3.50pm: The Mars science rover, Curiosity, has sent back it’s first images of the Martian surface after landing moments ago.
3.48pm: With only a short while left for trade today, here's what CMC Markets senior trader Tim Waterer had to say about the day's movements:
- The healthier looking US employment data came as a sight for sore eyes for financial markets, with the result motivating investors to recommence the search for yields.
- With little reason to buy US Dollars after the employment result, the Euro, gold and oil all made the best of the optimistic trading conditions to push higher as safe haven buying fell by the wayside.
- The US jobs result also seemed to inject the market a dose of patience with regards to ECB action, with traders now apparently willing to give Draghi more time to deliver on his ‘whatever it takes’ mantra. It is amazing what difference a day makes after the initial market temper-tantrum due to the ECB inaction on Thursday.
- The Australian share market quickly set about reversing Friday’s loss following the gains abroad on equity markets. Undoubtedly traders were heartened by the US employment report, with the weaker US Dollar and the resulting higher commodity prices providing a boon for our mining heavyweight stocks. RIO and BHP both did a u-turn from Friday’s performance, while the banks and retailers also enjoyed a run higher with investors feeling decidedly rosier over the global state of play.
3.40pm: Indonesia's economic growth surprisingly picked up in the second quarter of this year, fuelled by easy credit and strong domestic demand and signalling that south-east Asia remains resilient to the global slowdown.
Economists however cautioned policymakers may need to consider tighter policy in the medium-term to prevent distortions in the economy as rising imports causes a trade deficit.
Indonesia's statistics bureau said gross domestic product growth last quarter was 6.4 per cent from a year earlier against 6.3 per cent in the first quarter, helped by domestic consumption and investment. GDP grew by 2.8 per cent on a quarterly basis, although the figures are not seasonally adjusted.
According to the Department of Foreign Affairs and Trade, Indonesia was Australia’s 13th largest trade partner in 2011.
3.32pm: A ruling that Facebook is an advertising medium - and not just a way to communicate - will force companies to vet comments posted by the public.
3.28pm: Oil prices are lower with traders taking profits from a rally last week as they awaited the release of Chinese trade data later in the week, analysts say.
New York's main contract, West Texas Intermediate (WTI) light sweet crude for delivery in September, has fallen five cents to $US91.35 a barrel and Brent North Sea crude for September delivery has shed 36 cents to $US108.58.
Crude prices are weaker "after rallying on a stronger-than-expected US jobs report, while the market awaited Chinese trade data due later this week for trading cues," Phillip Futures says in a report.
3.20pm: In afternoon trade, the ASX200 is up 51.1 points, or 1.2 per cent, to 4272.6 and the dollar is higher at $US1.0574.
3.08pm: A full independent review of the Australian financial system is long overdue, an industry body representing customer-owned financial institutions says.
A report into the banking system by Deloitte Access Economics released on Monday found the 2008-2009 global financial crisis had swung the pendulum toward sector stability and away from competition.
It argues consumers have been left worse off and smaller banking institutions unable to compete against their larger counterparts as strongly as they did before the crisis.
Abacus, which groups the Australian mutual financial services sector, says the financial system had not been reviewed since the 1997 Wallis inquiry.
‘‘The findings of this report make it clear it’s now time to have an in-depth inquiry to improve competition and get a better deal for consumers,’’ Abacus chief executive Louise Petschler says.
2.52pm: Here’s a good afternoon read: Secrets of the rich: frugality, property, resilience.
2.44pm: More on Harvey Norman... the retailer says it continues to be affected by tough trading conditions and deflation, particularly in its technology department.
However, home appliances, furniture and bedding remain stable and are well-placed for any upturns in the housing market.
The company says global sales have been negatively affected by a six per cent deterioration in the Euro and a 4.7 per cent deterioration in the UK pound but benefited from a 1.7 per cent appreciation in the New Zealand dollar during the year.
It also says the profit before tax and minority interests of $373.9 million for the year to June 30 also included a $25 million decrease in property values.
2.23pm: If you’re in your 20s, a shortage of ready cash could be your biggest financial nightmare, while 30- and 40 somethings will be more worried about their mortgages and baby boomers stay awake worrying about their retirement funds, according to a recent financial study.
The report by superannuation fund Sunsuper finds that the generations are divided as much by their financial concerns as by their use of social media and musical taste.
The study - which is the second of Sunsuper’s six Wealth Index Reports for 2012 - included 1300 Australians from the Baby Boomer, Generation X and Generation Y groupings, investigating their attitudes to their finances.
Sunsuper general manager customer experience Teifi Whatley says some of the results were surprising.
‘‘The two biggest financial nightmares for Gen Ys were not having enough money to support their family (40 per cent) and interestingly, not having enough money to buy the things they want (15 per cent),’’ she says.
2.17pm: FW Holst research manager David Spry says the market ''is pretty much running on sentiment, what's happening in global markets, Europe et cetera''.
"We've seen this so many times recently that whenever you get a minor positive, it does seem to have a major impact on the market - the swings are quite large and that's a continuation of what we've been seeing," he says.
2.03pm: Gold has inched higher, extending gains from the previous session after better-than-expected US employment data lent support to risk appetite, weighing on the US dollar.
The greenback has fallen to a one-month low against a basket of currencies, helping gold to eke out small gains, although the overall sentiment for bullion remained mixed amid a lack of clarity on the macroeconomic policy front.
"Market participants are now betting on Fed action at next month's FOMC (Federal Open Market Committee) meeting as the unemployment rate ticked up, even though payrolls figure beat expectations," Chen Min, an analyst at Jinrui Futures in Shenzhen has told Reuters.
Spot gold had inched up $1.31 to $US1604.31 per ounce, extending the previous session's 0.9 per cent rise.
1.50pm: American mining major Cliffs Natural Resources has told Diggers and Dealers in Kalgoorlie that cost inflation on its Australian iron ore projects has far outstripped inflation on its projects in other parts of the world, Peter Ker reports.
Cliffs president, chairman and chief executive Joe Carrabba told the audience that news should not necessarily be seen as a negative, as it was a sign that things were going well in Australia.
Mr Carrabba said he would not mind seeing a bit more inflation in the United States, where his company also has iron ore projects.
Cliffs exports about 11 million tonnes of iron ore each year from Western Australia and has exposure to several other nations including Canada and Mongolia.
The company is not listed on the Australian Stock Exchange, and duly has a low profile here despite being a bigger producer than the likes of Atlas Iron, Arrium, BC Iron and other locally listed stocks.
Mr Carrabba said the global "megatrend" for developing nations like China to drive demand for resources remained intact despite recent pessimism about the health of the Chinese economy.
But he lamented the mining industry's failure to meet its production promises, and the rising number of "barriers" to projects including new taxes.
1.46pm: Sharp’s biggest one-day stock slide in 37 years sent its shares sold short in Japanese margin-trading accounts to a daily record as investors bet volatility will continue, Bloomberg reports.
The maker of Aquos televisions shares plummeted 28 per cent on Friday, the most since at least September 1974, after widening its loss forecast. The number of shares held in margin-trading accounts that profit if the stock falls jumped 10 times on Friday to 24.65 million, the highest since Japan Securities Finance began reporting daily data in August 1997. Holdings in accounts that profit if shares go up rose the same day to 6.69 million, the highest since 2004, according to JSF data compiled by Bloomberg.
“The selling hasn’t reached its climax yet,” Hiroyuki Uekusa, general manager of trading at Meiji Yasuda Asset Management. “This may be a good time for traders who bet on volatility.”
Sharp's shares are down another 4.2 per cent to 184 yen, headed for its lowest close since November 1974.
1.32pm: Retailer Harvey Norman’s says its full-year profit before tax is likely to be down almost 40 per cent on the previous 12 months.
The electrical and homewares retailer has announced that its global sales for the year ending June 30, 2012 were $5.74 billion, down seven per cent from the previous year.
The company says unaudited preliminary accounts for 2012 indicate profit before tax and minority interests of $227.6 million, down 39.1 per cent on the $373.9 million in 2011.
Harvey Norman's shares are down 0.2 per cent to $1.97.
1.18pm: CommSec's Craig James reckons there's now room for the RBA to cut rates, but don't expect official interest rates to fall tomorrow. In a note at lunchtime today, he writes:
They are likely to wait on a couple more months data, get a better gauge of the economy, before cutting rates by 25 basis points or a quarter of a per cent.
And he forecasts the price of petrol to will rise in about two weeks' time:
The ongoing rise in regional oil prices should flow through to domestic pump prices in a fortnight’s time. In fact the Singapore gasoline price has risen by almost A$6 in the past week and takes its tally to an increase of A$23 in the past six weeks.
The bottom line is that the average Australian pump price for petrol should continue to edge higher, however motorists have no reason to panic. The trick for motorists, as always, will be to time purchases.
1.12pm: A quick look around the region shows markets are higher almost everywhere:
- Japan's Nikkei 225: +1.72%
- Hong Kong's Hang Seng: +2%
- China's Shanghai Composite: flat
- South Korea's KOSPI: +1.97%
- NZX50: +0.5%
- Jakarta Composite: +0.9
1.01pm: The Aussie dollar has joined the party on financial markets since Friday, and that party could continue all the way to $US1.07 by the end of the week, says one analyst. Easy Forex currency dealer Tony Darvall said the Australian dollar had been on a steady rise following the change in sentiment over the ECB's comments last week.
‘‘We’ve had a sea change towards the ECB and the bailouts over there,’’ he said.
‘‘Then, we had much stronger than expected US jobs numbers and the market is going positive from that. If we look at that, then that’s why the Aussie (dollar) is back where it is and stock markets are up.’’
Mr Darvall said the euro was rising against the Australian dollar, as well as most other major currencies, and that should restrict any gains the local currency makes.
‘‘But, we’re still looking to break $US1.06 and possibly test $US1.07 US cents by the end of the week,’’ he said.
12.46pm: Integra Mining shares are 24.4 per cent higher on the takeover by Silver Lake Resources, but Silver Lake shares have lost more than 10 per cent.
Under the deal, Integra shareholders will get one Silver Lake share for every 6.28 shares they own, creating a 44 per cent premium to Integra's last closing price.
The deal, which would create a gold miner with 6.6 million ounces of gold resources, has unanimous support from both companies.
12.41pm: Here are the companies leading the ASX200 higher:
- Integra Mining: +24.44%
- Campbell Bros: +5.57%
- Bathurst Resources: +5.45%
- Henderson CDI: +4.91
- Sims Metal Management: +4.45%
- Rio: +4.29%
12.33pm: Interest rate cuts in recent months have failed to lift sentiment in the business sector, with a new survey showing conditions went backwards in the second quarter. The Australian Chamber of Commerce and Industry’s (ACCI) expectations survey for the June quarter showed the index for general business conditions eased to 44.9 points, from 45.1 points in the previous three months.
ACCI director of economics and industry policy Greg Evans said on Monday the result was disappointing. He blamed such international volatility and a strong Australian dollar for the weak survey which also showed indices for sales, profitability and employment moved further into contractionary territory.
‘‘It is particularly concerning that the negative sentiment in this survey has been recorded before the cost impact of the carbon tax has been realised,’’ Mr Evans told reporters in Canberra.
12.28pm: And Telstra reports full year earnings on Thursday. Goldman Sachs analysts expect the telco’s after-tax profits to grow by 10.4 per cent to $3.568 billion, exceeding market expectations by $22 million. They say Telstra’s growth will be led by a strong performance in mobile, with about 1.66 million new customers joining last year, service revenue growing by 9.6 per cent and bigger profit margins.
12.24pm: Looking at two more of the big companies reporting earnings this week. On Wednesday News Corporation will post its fourth quarter results. Goldman Sachs predicts it will be the Murdoch empire’s weakest quarter for 2012 with a 7.7 per cent decline in operating income to $US1.248 billion.
Goldman analysts forecast News Corp’s film division failed to lived up to its previous year’s hits - which included X-Men - and will have to swallow the costs for promoting the international launch of Ice Age 4. As Murdoch prepares to separate News’s publishing and entertainment arms, investors will be scrutinising those two divisions to see whether Rupert’s rhetoric matches reality.
12.19pm: Still no signs of life from the worm. Appears to be suffering a bad case of Mondayitis.
12.15pm: After a blockbuster start to the week, Aussie shares are just easing slightly as we approach the half-way mark in today' session. Gains on both the ASX200 and the All Ords are back to about 1.1 per cent. That's a long way off what Spain and Italy did on Friday. Both were up 6 per cent. France added 4.5 per cent and Germany almost 4 per cent.
12.11pm: Job advertisements fell for the fourth consecutive month in July, pointing to a slight rise in the unemployment rate, according to a private survey.
The ANZ job ad index slumped 0.8 per cent in July, after a 1.1 per cent drop in June. The index is now 9.1 per cent below its July 2011 level.
Newspaper job ads sank 3.2 per cent in the month compared with a 0.7 per cent decline in internet ads, ANZ says.
"Recent trends in job advertising continue to suggest that there has been a mild softening in overall labour demand in Australia," says ANZ head of economics Ivan Colhoun.
12.06pm: Oil has fallen from its highest close in two weeks in New York amid speculation that its biggest gain in more than a month was excessive, Bloomberg reports.
Futures have slipped as much as 0.5 per cent after surging 4.9 per cent on August 3, the most since June 29.
“The previous peak of around $93 for West Texas looms as a bit of a psychological resistance level for the market,” says Ric Spooner, a chief market analyst at CMC Markets in Sydney. The weakening of tropical storm Ernesto “takes away a potential supply disruption,” he says.
Oil for September delivery slid as much as 45 cents to $US90.95 a barrel in electronic trading on the New York Mercantile Exchange and is at $US91.17.
12pm: At midday (AEST), the ASX200 is just off its highs but is still up 1.3 per cent. Among the sectors, miners are up 2.4 per cent, industrials are up 1.5 per cent and financials are up 0.9 per cent.
11.55am: Hong Kong stocks surged 2 per cent at the open, going above the 20,000 mark, after better-than-expected US jobs figures sparked a strong performance on Wall Street.
The benchmark Hang Seng Index is up 401.03 points, or 2.04 per cent, to 20,067.21 in the first few minutes of trade.
11.51am: A Qantas pilot who tested positive to alcohol after being removed from a flight has been stood down from duties, the air safety regulator says.
The Civil Aviation Safety Authority was advised of the incident by the airline, which is dealing with the matter under its drug and alcohol management policy, CASA spokesman Peter Gibson says.
‘‘Qantas informed us, as it should have, when the incident occurred. They’ll keep us fully informed.’’
Mr Gibson says the female pilot returned a positive test after a ‘‘potential problem’’ was identified on a Qantas flight. CASA is unaware of what her reading was, he says.
11.44am: The Federal Labor Government has come under attack in the opening speech at the annual Diggers and Dealers conference, Peter Ker reports from Kalgoorlie.
Chairman of the forum Barry Eldridge criticised Treasurer Wayne Swan and Prime Minister Julia Gillard for their recent war against Australia's mining billionaires like Andrew Forrest, Clive Palmer and Gina Rinehart.
The Government has accused those wealthy individuals of trying to use their money and influence public debate in Australia, particularly on issues like the mining tax and the carbon tax.
Mr Eldridge says there is nothing new in wealthy individuals trying to use their money to influence debate and politics, nor is there anything wrong with it.
He called for an end to the government's bullying campaign against those wealthy individuals, saying their input is needed to maintain a meaningful levels of public debate.
Bashing the federal government is a familiar sport at Diggers and Dealers, particularly in recent years since the Labor Government started its crusade to collect more tax revenue from the mining sector.
11.37am: Property owner GPT Group has bought two business park assets in western Sydney for a total of $53.6 million.
GPT says the two logistics properties, in Silverwater and Eastern Creek, will assist in lifting its holding of logistics and business park assets from 10 per cent of its total investments to 15 per cent.
‘‘GPT has added $115 million of acquisitions to its logistics and business parks portfolio this year and is on track to achieve its investment targets,’’ head of investment management Mark Fookes says.
11.20am: Cochlear is one of the major companies due to report full-year earnings tomorrow. In a note to clients today, Goldman Sachs predicts the hearing-implant maker to earn $154 million after tax, slightly down on the Bloomberg consensus of $160 million.
Investors are still waiting for the company to give an update on the product recall, which caused Cochlear’s share price to plunge about 20 per cent last September. But Goldman Sachs points out that Cochlear’s gross margin still remains above 70 per cent - higher than almost any listed company.
11.12pm: The ASX is holding firm at 1.4 per cent higher. Even the retailers are benefiting from the return to optimism:
- Woolworths: +0.9%
- Wesfarmers: +1.53%
- Harvey Norman: +1.52%
- DJs: +0.84%
- Myer: +1.69%
11.06am: Now for the banks:
- CBA is 1.05% higher to $56.57
- ANZ is 1.33% higher to $23.65
- NAB is 1% higher to $25.24
- Westpac is 1.12% higher to $23.56
10.59am: Starting with the miners, we'll look at how some of the bigger companies are performing today:
- BHP is 2.64% higher to $32.13
- Rio is 4.25% higher to $54.22
- Fortescue is 3.35% higher to $4.32
10.53am: While we're on a mining theme, West Australian gold miner Integra Mines has agreed to a $426 million takeover by fellow gold miner Silver Lake Resources.
The takeover will create a gold company with resources totalling 6.6 million ounces of gold, and current production of 200,000 ounces per year.
Integra shareholders will receive one Silver Lake share for every 6.28 Integra shares they hold, representing a premium of almost 44 per cent to the last trading price of Integra shares.The deal values Integra at $426 million.
10.47am: And here’s a little taste of what’s in store at day one of the Diggers & Dealers conference from BusinessDay’s Rania Spooner, who’s in Kagoorlie for the event:
The drinking holes and quiet streets of historic gold mining hub Kalgoorlie-Boulder were yesterday stampeded on cue by thousands of suit-clad mining delegates ready to wheel and deal over the coming days.
No longer a teenager, the annual Diggers and Dealers conference has in its 20th year grown into an industry beast heralded by some as one of the most important meet and greets for miners, explorers and prospective financiers in the Southern Hemisphere. Preview.
10.44am: The worm is still broken. We're removing it until it's fixed.
10.42am: Consumer prices rose only slightly in July, despite the start of the carbon tax at the beginning of the month. The TD Securities-Melbourne Institute inflation gauge rose 0.2 per cent in July, after a 0.2 per cent fall in June and a flat result in May, the survey showed.
In the year to July, the inflation gauge was 1.5 per cent, the lowest annual rate in nearly three years and well below the Reserve Bank of Australia’s (RBA) two to three per cent inflation target band.
TD Securities head of Asia-Pacific Research Annette Beacher said the start of the carbon tax on July 1 came at a time when most price pressures were weak.
10.35am: Fortescue shares are 3.6 per cent higher to $4.32 after the company surprised the market by raising more funds than it promised to less than three weeks ago.
Resources writer Peter Ker reports that it in what may be a precautionary move against slumping iron ore prices. He writes:
The iron ore exporter reported today it had raised $1.5 billion in short term loans to cover a recent cost blow out on its expansion project at Port Hedland. When Fortescue announced that blow out on July 16, chief financial officer Steve Pearce said the company would look to borrow a bit more than the $600 million shortfall, and would probably raise "up to $US1 billion".
10.32am: Now for the early sliders on the ASX200:
- Perseus Mining: -3%
- Duet Group: -0.95%
- Navitas: -0.79%
- Lynas: -0.64%
- Alacer Gold Corp: -0.51%
10.28am: Here are the main gainers early today:
- Coalspur: +6.31%
- Bathurst Mining: +6.2%
- Macmahon Holdings: 5.3%
- Linc Energy: +5%
- Aquila: +5%
10.22am: Local stocks have started the week vigorously but the worm is still asleep. We're looking into it now.
10.19am: Materials stocks are enjoying the offshore return to positivity. That sub index on the ASX200 is up 2.67 per cent. Here's how the other subh indices are performing:
- Energy: +1.8%
- Industrials: +1.76%
- Info tech: +1.32%
- Health: +1.27%
- Consumer discretionary: +1.21%
10.14am: Markets now nearing a gain of 1.4 per cent. Solid start to the week. We're looking forward to the TD Securities inflation guage at 10.30am.
10.10am: The Australian share market has opened more than one per cent higher.At 1010 AEST on Monday, the benchmark S&P/ASX200 index was up 49.4 points, or 1.17 per cent, at 4,270.9, while the broader All Ordinaries index was up 47.7 points, or 1.12 per cent, at 4,290.7.
On the ASX 24, the September share price index futures contract was up 60 points at 4,245, with 10,047 contracts traded.
10.06am: Early take - shares have sprinted to an early gain of 0.8 per cent as markets open.
9.57am: Ric Spooner, chief market analyst at CMC Markets, says today's sharemarket performance has plenty riding on it:
A strong rally today will potentially confirm a successful retest of the 200 day moving average of the S&P/ASX 200 index. After breaking above the 200 day average last Monday, price fell back towards it later in the week with Friday’s low being just above the current average at 4206.
A move above last Tuesday’s high of 4288 this week would confirm rejection of the 200 day moving average support and may set the market up for a rally towards resistance at around 4350.
9.52am: Argo Investments has reported a 2.8 per cent drop in profit after tax to $167.3 million. In a release to the ASX, CEO Jason Beddow said Argo’s ‘‘performance for the past year was solid, considering that the Australian equity market experienced another difficult financial year’’.
Mr Beddow also had some interesting thoughts on global equity markets.
"The economies of many developed countries have continued to slow and the European debt crisis has regained prominence.
"The impact of tough austerity measures in response to unsustainable sovereign debt levels in Europe is pushing many countries into recession and the region is likely to remain a potential source of adverse shocks for some time to come," he said.
However, he said Australia’s relative strength ‘‘compared to other western economies leaves us well placed to weather future economic shocks’’.
9.47am: It's a comparatively busy week for economics news, too. All eyes move to the Reserve Bank of Australia tomorrow for the August interest rate decision. A Bloomberg survey of 27 economists predicts the central will keep official rates on hold at 3.5 per cent. Only one of the surveyed economists dissented, predicting a cut of 25 basis points to 3.25 per cent.
On Thursday, the Australian Bureau of Statistics releases labour force figures for July. The market is forecasting an increase of 10,000 in total employment but unemployment to rise to 5.3 per cent. In June, the unemployment rate rose to 5.2 per cent from 5.1 per cent.
Here's this week's finance news calendar.
9.42am: Turning to what's ahead this week, reporting season begins with a host of major companies including Telstra, Tabcorp, and Cochlear reporting full year results. For a full list of who's reporting, check here. Here's a quick list of this week's major local news:
- Tuesday: RBA decides on official interest rates, AiG/Housing Industry Association performance of construction index for July
- Wednesday: ABS housing finance for June, Stockland and Harvey Norman full year results, Rio first half results
- Thursday: ABS labour force data for July, Tabcorp, News Corp and Telstra full year results
- Friday: RBA statement on montary policy, Crown full year results
9.40am: Meanwhile in Europe on Friday, markets posted big gains after a heavy global sell-off on Thursday when ECB Mario Draghi announced no immediate measures to bring down dangerously high borrowing costs for some eurozone states, disappointing markets primed for action.
However, by Friday, analyst comment on Draghi's comments had turned more positive, suggesting the ECB and eurozone governments were gradually putting in place the framework for a lasting solution to the debt crisis.
9.38am: Wall Street rallied to its highest level since early May on Friday on a stronger-than-expected US jobs report, but an increase in the jobless rate to 8.3 per cent kept prospects of further monetary stimulus from the Federal Reserve on the table.
Nonfarm payrolls rose 163,000 last month, the Labor Department said, breaking three straight months of job gains below 100,000 and offering hope for the ailing economy.
9.35am: Local shares are looking at a gain of more than one per cent, according to the futures market. And one analyst reckons that lead will hold.
Stan Shamu, a market analyst at IG Markets, says the Australian dollar’s surge this morning suggests that the ‘‘buoyant mood’’ from Friday’s better-than-expected US jobs report will carry into today’s trading.
As earnings season gathers pace, he says investors will continue shifting their money from higher-risk, lower-yielding stocks such as miners, into safer, higher-yielding companies including the big banks and Telstra.
‘‘You want to get in before everyone starts flooding in ... before everyone knows what the dividend is," he added.
Mr Shamu says today’s economic data, including ANZ job ads, is unlikely to budge investors, who are waiting on tomorrow’s interest rate announcement by the Reserve Bank.
9.32am: Aussie shares look set for a strong start to the week after Wall Street and Europe closed out last week on a high note. We'll look at the reasons for that in a moment. Meantime, for a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:
- AUD stronger on US job gains
- Oil jumps on jobs data
- Gold climbs on US jobs figures
- European stocks jump higher
- Aussie stocks cap winning week
- US stocks gain as payrolls jump
- Wall St week ahead: Positive momentum despite head winds
- Australian business calendar: August 6 to 10
This blog is not intended as investment advice
BusinessDay with agencies