Markets Live: Stocks buoyed by miners
Australian shares clock up a second day of gains, led by resource stocks, as investors become more confident about the global economy.
4.35pm: Not a lot of action expected overnight. Eurozone CPI is the main eco stat from that region, while the US will have retail sales figures for June and NY area manufacturing.
We're almost done for the Markets Live blog for the day. As promised, here's the evening markets wrap.
Thanks for joining us. We'll be back tomorrow at 930am AEST.
4.30pm: Small note about CBA. It hit an intra-day high of $54.30, its strongest since February 11 last year.
It dropped back, though, to end the day at $54.06 - a gain of 29 cents on the day.
4.21pm: Whitehaven Coal was the standout, rising 18%.
At the other end of the scale, AWE fell 4.7% to be the worst performer among the top 200.
4.18pm:Among the major stocks:
BHP added 1%
Rio rose 0.8%
Fortescue jumped 2.4%
ANZ added 0.6%
CBA rose 0.5%
NAB fell 0.4%
Westpac rose 0.5%
Telstra fell 0.3%
Qantas lost 2.4%
4.16pm: Energy shares led gains, adding 1.2%, while materials added 1% and financials 0.4%. Only the telcos sector ended the day lower, off 0.3%
4.14pm: All Ords also added 24.9 points, or 0.6%, to 4143.2 points.
4.12pm: ASX200 index ended the day up 22.9 points, or 0.6% o 4105.1.
4:06pm: We'll have the closing share prices in a jiffy. In the meantime, here's Nathan Bell's Part II item on Overseas stocks rip for the picking. Worth a bookmark to read later.
3.58pm: Households have been enjoying cheaper fuel lately. That looks set to change:
Commsec economist Savanth Sebastian said petrol prices are tipped to increase after hitting 18-month lows in recent weeks.
Mr Sebastian said the key Singapore gasoline price has risen 10 cents a litre recently and this would flow through to Australia.
‘‘In the short-term, pump prices could rise around five cents a litre and eventually the increase could be as much as 10 cents a litre,’’ he said in a statement.
The metropolitan average rose 1.4 cents a litre to 132.1 cents last week, while the regional average price fell 0.9 cents a litre to 139.3 cents. It was the first weekly rise in nine weeks.
3.50pm:Another trading halt:
Gerard Lighting Group has been placed in a trading halt at the request of the company, pending the release of a possible strategic transaction.
Shares in the lighting products group will remain in a trading halt on the Australian Securities Exchange until the earlier of the commencement of normal trading on Wednesday or when the announcement is released to the market.
Gerard Lighting did not elaborate any further, but earlier in the year the company attracted a new substantial shareholder in Commonwealth Bank, which holds a 6.64 per cent interest.
Gerard Lighting shares last traded at 80.5 cents up 7.3% before the halt.
3.44pm: As noted earlier, Macquarie's Brian Redican is a bit pessimistic about the jobs outlook.
Here's the story link. Apart from the retirees and stay-at-schoolers, he also has some interesting things to say about rising unemployment in the more affluent parts of Sydney and Melbourne, in particular.
3.32pm: Bit quiet around the region and beyond, with Japan closed.
China's main markets are off about 1.4%, while Korea's Kospi and Singapore's main index are both about 0.2% higher.
Dow futures are down about a quarter of one percent, while London's FTSE futures are about 0.2 per cent up.
3.20pm: Whitehaven Coal, meanwhile, has some production numbers to go with its share spurt.
The company says June quarter coal sales topped 1.43 million tonnes.
It will provide the Tinkler Group with four weeks due diligence, according to Bloomberg.
Its stocks remain about 16% higher for the day.
3.10pm: More on the commodity front:
Corn advanced to the highest level in more than 10 months as drought seared crops in the US, the world’s biggest exporter, hurting yields and extending four weeks of gains.
Soybeans rallied to the highest since 2008, Bloomberg reports.
Corn for December delivery climbed as much as 4 per cent to $US7.70 a bushel on the Chicago Board of Trade, the highest price for a most-active contract since August 31, and traded at $US7.6925 in Singapore.
Soybeans for November delivery rose as much as 2.4 per cent to $US15.9025 a bushel, the highest price since July 2008, and were at $US15.8625. Wheat rallied 2.5 per cent to the most expensive since February last year.
2.58pm: One of the comments on the blog noted China reaction to its own GDP figures from last week. Here's a bit from Australia's biggest export market:
China’s Premier Wen Jiabao warned that the nation’s recovery is yet to build up momentum, fueling speculation that extra economic support measures may be announced after a cabinet meeting this week, Bloomberg reports.
“It should be clearly understood that the momentum for a stable rebound in the economy has not yet been established,” Wen said during an inspection tour in southwest Sichuan province, according to a Chinese-language report from the official Xinhua News Agency. At the same time, expansion is within the targeted range and measures to stabilize growth are “bearing fruit,” he said.
2.50pm: Looks like some of the market's gains are eroding away but ASX200 unlikely to give them all up in the next hour or so.
Meanwhile, BusinssDay's Adele Ferguson has taken a look at the Seven West deal:
The biggest surprise in today's $440 million capital raising at Seven West Media was that major shareholder private equity group KKR has taken up the renounceable equity issue.
As with all private equity companies, KKR - which holds 11.8 per cent of the media company - is typically not a long-term holder in its investments, and Seven is no exception.
Opting not to take up the group's renounceable equity issue would have given it an opportunity to dilute its shareholding, rather than chip in more money.
What is even more interesting is that KKR is taking up the retail portion of the capital raising rather than the institutional part.
2.28pm: Bit more on the economy from BusinessDay's Chris Zappone:
Australia’s underlying unemployment rate is rising faster than official figures suggest, with a combination of baby-boomer retirements and disheartened youth masking the jobless gloom, according to a leading economist.
The official jobless rate may rise above 6 per cent next year as some of the artificial curbs ease, said Macquarie senior economist Brian Redican.
Mr Redican said the ‘‘modest deterioration’’ in the labour force in recent months - June’s jobless rate edged up to 5.2 per cent - may be providing a ‘‘false sense of security that unemployment won’t increase from here.’’
‘‘In our view, there remain significant upside risks to the unemployment rate,’’ he said.
2.17pm: Not a lot on the economic calendar this week.
RBA minutes from the July 3 meeting are out tomorrow, with economists and investors likely to pounce on hints that the central bank was even considering another interest rate cut.
Investors are rating the prospect of an August 7 rate cut as about a 60 per cent chance at this point.
NAB's business confidence survey is out on Thursday, and that's about it from Australia this week.
2.08pm: Whitehaven Coal shares continue to lead the market, and were up about 16% for the day in recent trading.
The jump is big enough to make Whitehaven a larger contributor to the overall market's advance than Rio Tinto. (It's up about 0.9%)
Qantas, though, continues to sag. It's down again, losing 2 cents or almost 2% to 103.5 cents.
2.03pm: Meanwhile, out in the west, the WA EPA has recommended Woodside's Browse LNG project - with strict conditions.
Doesn't seem to have surprised investors, with Woodside shares up 21 cents, or 0.7%, to $30.51.
1.57pm:Bit of regulator news around, such as:
Remember a couple of weeks back when baker Brumby's got caught telling 250 franchisees to blame the carbon tax for a price increase?
Anyway, the ACCC has accepted Brumby's apologies from Brumby's owner, Retail Food Group:
Retail Food Group has taken a number of prompt actions to redress any impact of Brumby's statement. This includes writing to franchisees and outlining their legal obligations associated with price representations and the effect of the carbon price. Retail Food Group is also developing training for staff and franchisees with further guidance on their legal obligations.
Retail Food Group has cooperated with the ACCC and offered a court enforceable undertaking that neither Retail Food Group nor its subsidiaries, including Brumby's, will engage in similar conduct in the future.
1.46pm: Not sure if you caught this one, but worth a look: Avoid the stress zone on your home loan.
Seems like more people are stretched even though interest rates are generally falling.
1.22pm: Software giant Microsoft has parted company with NBC News, pulling out of their joint venture MSNBC to launch its own online news service, NBC News has announced.
Moving on "allows us to go out and innovate," Bob Visse, general manager of MSN.com, told NBC news, confirming that MSN.com had begun hiring for a new news operation - as yet unknown - that will launch later this year.
"If you start thinking about what we're going to be doing in Windows and the Bing app and what we're going to be doing... across multiple platforms, it makes a lot of sense for Microsoft," he says.
"We're talking about using technology and using data to solve information delivery and news delivery in new and innovative ways. It's really difficult for us to do that when we have an exclusive, single-source relationship with one news provider."
1.12pm: Australia’s largest integrated poultry producer Inghams Enterprises is up for sale.
The company, which has already notched up more than $2 billion in sales so far in 2012, has production and processing facilities in Australia and New Zealand.
It produces a wide variety of chicken and turkey products as well as animal stock feeds.
Bob Ingham, the long-standing and sole shareholder of Inghams Enterprises, announced the sale plan earlier today.
‘‘My decision marks the next phase for the successful ongoing development of the company and is one that I, as sole shareholder, have considered for a number of years.’’
1.03pm: Oil prices are lower in Asian trade after Saudi Arabia and the United Arab Emirates opened crude pipelines bypassing the Strait of Hormuz, which Iran has repeatedly threatened to close, analysts say.
New York's main contract, light sweet crude for August delivery, shed 34 cents to $US86.76 a barrel and Brent North Sea crude for delivery in August retreated five cents to $US102.35.
Alternative crude transport routes created by the UAE and Saudi pipelines alleviated supply concerns which had been held hostage by Iran in negotiations with the West over its nuclear program, IG Markets said in a report.
"Very quietly and strategically Saudi Arabia and UAE have opened up pipelines that allow it to bypass the Strait of Hormuz which up until now has been the trump card for Iran in its bargaining with the West."
"This fresh transport oil link should help weaken the threat of supply disruption coming out of Iran and force it back to the negotiating table."
12.56pm: Beef producer Australian Agricultural Company (AACo) has reached a tentative agreement with Western Australia’s Bunuba people to manage the Leopold and Fairfield cattle stations in the Kimberley region.
The Bunuba people are the traditional owners of land in the Kimberley region and hold pastoral leases over the two cattle stations through the Bunuba Cattle Company.
Under the proposed deal, AACo will manage the stations’ herds and the marketing and procurement of cattle.Bunuba will receive an annual rent under the sub-leases that includes a component of profit from the AACo cattle operations.
12.50pm: Commonwealth Bank currency strategist Peter Dragicevich says there’s no real catalyst for a slight easing in the dollar.
’’Chinese gross domestic product (GDP) data released on Friday showed growth of 7.6 per cent in the second quarter of 2012 - better than the market’s expectations, even though it was the slowest pace of growth in three years.
Mr Dragicevich says the country’s economy could be expected to move into even stronger territory later in the year.
‘‘We had some comments from the Chinese premier (Wen Jiabao), who warned that momentum for a rebound hasn’t been established yet,’’ he said.‘‘But we think that given the recent rate cuts, and the scope for more fiscal policy, it’s likely that we’ve seen the bottom of the Chinese cycle, and we should see its economy re-accelerate over the second half of the year.’’
12.42pm: OptionsXpress market analyst Ben Le Brun says the market is still experiencing a tentative uplift in the wake of not-so-bad Chinese economic growth figures released last Friday.
‘‘It (the market rise) is still being generated by China, with that economic data coming in line with expectations when the doomsayers and the bears were expecting something a lot lower,’’ Mr Le Brun says.
‘‘We (the Australian market) had a little rally on Friday, Wall Street also rose on Friday, and now we’ve gone up in kind again.’’
12.35pm: As the graph above shows, stocks have held onto most of their gains to be a little off their high for the session. The ASX200 is now up 28 points, or 0.7 per cent, to 4110.2 after reaching 4126.9 earlier.
12.25pm: Meanwhile, Australian wheat stocks at the end of June were down 14 per cent from a month earlier at 14.1 million tonnes, the ABS said.
The largest draw-down of wheat in bulk storage came from New South Wales, which saw a drop of 850,000 tonnes.
Worth a look at the wheat price...quite a pickup in the past couple of weeks. This Bloomberg chart is of US wheat futures since the start of 2011:
12.06pm: Not quite as busy a week on the economics front as last week (or next week, with CPI), but here's one stat of note out today:
Australia’s total personal finance loans rose 0.4 per cent in May, official figures show.
The ABS said seasonally-adjusted personal finance commitments increased to $7.348 billion in May, up from $7.315 billion in April.
Total commercial loans in May fell 12.0 per cent to $31.022 billion, seasonally adjusted, from $35.244 billion in April.Lease finance was up 3.2 per cent to $569 million, compared with $551 million in April.
Housing finance for owner occupation rose 0.2 per cent to $13.637 billion, from $13.610 billion the month before.
The commercial lending slide won't help banks keep up their run of record profits.
12.02pm: Bit of lunch-time reading from Michael Pascoe: Let the banksters get away with it.
Here's an outrageous thought: we should let the Libor banksters get away with it.
Not completely, as there was some straight-out fraud for personal gain that deserves retribution and individuals who should be held to account. But we would collectively be better off if the majority involved in the big fiddle are allowed to go financially unpunished.
The path presently being beaten by ambulance-chasing lawyers and tardy-but-newly-vengeful regulators has the potential to damage some still-fragile institutions for little public benefit.
11.54am: Appetising, perhaps, at this time of the day:
Pie maker Patties Foods expects full-year profit to increase by as much as 7 per cent as it continues to develop new products in the face of difficult trading conditions.
The maker of Four ‘n Twenty pies and other famous brands, such as Nannas and Herbert Adams, said its margins had come under pressure in the supermarket category as the popularity of private label products continued to grow.
‘‘The trading environment remains challenging with continuing margin pressure and low consumer sentiment,’’ Managing Director Greg Bourke said in a trading update.
Patties, which recently launched a new chicken parma pie, said it expected net profit after tax (NPAT) for the year to June 30, 2012, to increase by between 4.3 per cent to 7 per cent, in the range of $19.2 million to $19.7 million, after recording an $18.4 million profit in fiscal 2011
11.52am: Banks are lagging the overall market's gain, with an advance of about 0.6% for the financials sub-index today.
Worth taking a bit of a look at Commonwealth Bank. Its shares hit a 17-month high earlier today, and are up about 10% in 2012.
Here's a Bloomberg chart of the stock since the start of 2011:
11.38am: The gains of more than 1 per cent to mining giants BHP Billiton and Rio Tinto come ahead of quarterly production reports due this week.
"Hopefully, they will be strong figures. The market is expecting strong numbers," says Macquarie Equities division director Lucinda Chan of the iron ore component of the production reports.
She says investors have been content to follow strong leads from Europe and Wall Street after the Chinese GDP data released on Friday.
11.28am: Gold is trading little changed, retaining gains from the previous session clocked up after China's growth data came in on target and eased worries about worsening economic conditions, feeding risk appetite and boosting the euro.
Spot gold is nearly flat at $US1590.59 an ounce after rallying 1 per cent on Friday.
11.22am: While the Canadian government has approved commodities trader Glencore International’s $6 billion takeover of dual-listed agribusiness Viterra, the transaction still requires the approval of the Chinese government.
The review by China’s Ministry of Commerce, required under China’s anti-monopoly laws, is expected to continue into August.
‘‘Viterra and Glencore do not expect closing of the acquisition of Viterra by Glencore pursuant to the court-approved plan of arrangement (the arrangement) to occur by the end of July 2012,’’ Viterra has said in a statement.
‘‘Viterra and Glencore will update the market in due course when they expect closing of the arrangement to occur.’’
Canada-based Viterra is listed on the Toronto Stock Exchange and the Australian Securities Exchange.
11.16am: Shares in Whitehaven Coal soared as much as 21.1 per cent after coal mining magnate Nathan Tinkler offered $5.3 billion to take the company private, with support lined up from some key shareholders.
Whitehaven shares opened at $4.10 and last traded up 17.7 percent at $4.06, compared with the offer of $5.20 a share.
11.12am: Telstra has added 2 cents to $3.86, recouping its slight losses from late last week, with its high yield continuing to buoy interest in the stock, Brian Robins reports.
Technical traders could be tempted to move on following its recent gains, however. Bell Potter Securities' chartist advised its clients today that following a series of technical 'buy' signals triggered when it was trading in February last year at $2.88, and again at $3 in May last year, $3.18 in October last year, at $3.25 last December, and again at $3.47 in April, it may be time to move on, now that the shares have reached the nominated target of $3.84.
"For those who bought TLS purely as a technical trading situation (when the technical buy signal was generated), it is a technical sell i.e. the buy recommendation target has been reached, thereby completing the trade," clients were advised this morning. "However, for those with longer-term objectives, TLS is now rated as a technical hold."
A technical 'sell' signal will be generated once a top has formed, which has yet to occur, it has told clients.
11.04am: While Australian cafe chain The Coffee Club planned its assault on the Egyptian market, its future customers kept themselves busy staging a revolution.
10.55am: Cameron Securities client adviser Adrian Leppinus says the local markets has taken its cues from the United States.
‘‘Our market is following the lead from overseas and the big move in the commodities side of things,’’ Mr Leppinus says.
‘‘Resource stocks are generally leading us this morning and a bit of corporate activity (Whitehaven) always helps a sector that’s been under pressure.’’
He expects the positive momentum to continue in afternoon trade.
10.49am: Among the big miners, BHP is up 1.3 per cent to $30.88 and rival Rio Tinto has gained 1.7 per cent to $55.01. Fortescue is also up - 1.2 per cent to $4.58.
10.43am: Sticking with the banks:
- ANZ is up 1% to $22.56
- CBA is up 0.7% to $54.12
- NAB is up 0.3% to $23.68
- Westpac is up 0.9% to $22.25
10.37am: Westpac will push ahead with a listed debt issue, with the lending giant outlining plans to raise around $500 million, through a subordinated note issue, Eric Johnston reports.
The securities, to be called Westpac Subordinated Notes, are fully paid, unsecured subordinated debt. However, unlike hybrid shares the notes don’t convert to ordinary shares.
The notes are being offered with an issue price of $100 each, with Westpac reserving the right to raise more funds.
“Westpac subordinated notes provide an opportunity for investors to diversify their investment portfolio with a simple investment product, paying regular, quarterly interest payments at an attractive yield”, says Westpac’s Group Treasurer, Curt Zuber.
10.32am: For those wondering, trading in Whitehaven is expected to resume at 11am AEST. The shares last traded at $3.45 and many are expecting the stock to rise.
10.26am: Media stocks have largely taken the Seven West $440 million capital raising in their stride.
Seven Group, which owns a third of Seven, is up as much as 13 cents, or 1.9%, to $6.91 in early trading.
Fairfax is up half a cent to 56.5 cents, while Ten Network is flat at 48 cents.
APN shares are also flat at 60 cents.
Seven West shares are exactly 50 cents down on the year, based on Friday’s close of $1.62 – with the share sale at $1.32 likely to knock them lower once trading resumes.
10.21am: Among the sectors:
- Energy stocks are up 1.1%
- Financials are up 0.6%
- Gold stocks are up 2.9%
- Industrials are up 1.3%
- Materials are up 1.9%
10.17am: Stocks are now heading higher. The ASX200 is up 38.1 points, or 0.9 per cent, to 4120.3. The dollar, though, has slipped a bit - it's at $US1.0227.
10.11am: Here's a look at the week ahead with Michael Pascoe.
10.04am: Early take - the market has opened higher. The ASX is up 0.4 per cent in the opening minutes of trade.
9.55am: Eyes wll be on Whitehaven Coal in a few minutes after a consortium led by coal magnate Nathan Tinkler offered $5.3 billion, or $5.20 a share, to buy out the company.
The bid, conditional on lining up funding, was at a massive 50 per cent premium to Whitehaven's close on Friday.
9.51am: More on Seven West... Bell Direct equities analyst Julia Lee says the capital raising is to ‘‘get it out of the danger zone of its debt covenants”.
The speculation of a Seven West capital raising has been mounting since its April profit downgrade, she says.
“The commentary from media companies since then has been that the advertising market has gotten worse.”
“The weak advertising conditions eat into earnings and there is a concern that Seven West is pretty close to their debt covenant.”
If there is a fall in earnings before interest next year that will probably put Seven West “precariously close” to breaching its debt covenants, says Ms Lee.
9.45am: The Australian Industry Group has found businesses are improving their energy efficiency but are still under pressure from rising energy prices.
The Ai Group report Energy shock: Pressure Mounts for Efficiency Action surveyed more than 300 businesses about their use of energy, their management of electricity costs, their energy efficient practices and their views on related government policies.
The organisation’s recommended governments engage more closely with industry in the design and implementation of energy efficiency policies. It also recommends governments investigate business responses to changing energy prices to determine whether they’re impacting on competitiveness.
9.37am: The Kerry Stokes-controlled media group Seven West Media is lining up a $450 million share sale, looking to raise funds to pay down debt with its earnings hit by an advertising slump, the AFR reports.
Here's a section from the ASX release:
The securities of Seven West Media Limited (the “Company”) will be placed in Trading Halt Session State at the request of the Company, pending the release of an announcement by the Company. Unless ASX decides otherwise, the securities will remain in Trading Halt Session State until the earlier of the commencement of normal trading on Thursday, 19 July 2012 or when the announcement is released to the market.
9.32am: For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:
- SPI futures are 33 points higher at 4082
- The $A is higher at $US1.0251
- In the US, the S&P500 rose 1.65% 1356.78
- In Europe, the FTSE100 rose 1.03% to 5666.13
- Gold rose $26.70 to $US1592 an ounce
- WTI crude oil rose $1.02 to $US87.10 a barrel
9.30am: Hi everyone. Welcome to the Markets Live blog for Monday.
Contributors: Peter Litras, Peter Hannam
This blog is not intended as investment advice