Markets Live: Stocks buoyed by China

4.22pm: Other standouts on the day:
Pacific Brands shed 5.3% to be the worst among the top 200.
QR National fell 3.6%
BlueScope Steel rose 3.6%
Leighton added 3.4%

4.20pm: Among the major stocks today:
BHP up 0.3%
Rio Tinto fell 0.3%
Fortescue lost another 1.9%
ANZ rose 0.8%
NAB rose 0.6%
CBA rose 0.5%
Westpac added 0.8%
Wesfarmers rose 1%

4.17pm: Among the key sectors, financials added 0.7%, utilities rose 1.1% and materials rose 0.1 per cent. Energy stocks ended flat.

4.15pm: For the week, the ASX200 lost 1.8%, its first loss in three weeks and the biggest weekly retreat in nine weeks.

4.14pm: The All Ords rose 12.3 points, or 0.3%, to 4118.3 points.

4.13pm: ASX200 added 14.2 points, or 0.35% to close at 4082.2 points.

4.05pm:Just time for a quick look ahead. Dow futures are up about 0.4% and London is looking at a gain of about 0.5% at the open - much as the local market has fared today.

Italy's ratings downgrade by Moody's may feature in European trading, while the US will see the release of the latest University of Michigan Confidence gauge - a modest pick-up is expected.

3.55pm: Friday the 13th hasn't turned out so bad for the markets, especially after China failed to shock.

Still, lest investors get too complacent, here's one bellwether not doing so great:

Singapore's trade-dependent economy shrank 1.1 per cent in the second quarter on an annualised and seasonally adjusted basis, reversing a strong January-March performance in another sign that weakness in Western countries has begun to affect Asia, Reuters report.

The wealthy Southeast Asian city-state, a major financial and business centre whose trade is more than three times its gross domestic product, is regarded as a leading indicator for Asia because of its open economy.

The surprise contraction in Singapore's GDP prompted at least three banks to cut their full-year forecast and signalled the central bank may ease monetary policy when it issues its next half yearly policy statement in October.

(Read the longer story here.)

3.47pm: And a bit more on M&A:

Pipeline Partners Australia looks set to succeed in its $1.23 billion takeover bid for energy infrastructure investor Hastings Diversified Utilities Fund (HDF).

Hastings on Friday announced a subcommittee of directors at Hastings Funds Management Ltd (HFML), the entity responsible for HDF, had unanimously recommended that HDF securityholders accept the offer of $2.325 per HDF security.

The recommendation is, however, subject to there being no better offer and an independent expert's report concluding the offer is fair and reasonable.

(Read the longer version here.)

3.39pm: At current levels, the ASX200 is off about 1.8 per cent for this week.

That would make it the first losing week in three...and the worst week in about two months.

3.31pm:Shares are giving back some of their gains, but should rise for the first time in seven days.

Among the major sub-groups, materials are now flat after the China boost has fizzled, while energy shares are off 0.1 per cent but financials are up 0.8 per cent.

3.17pm: Taking a wider view, the dollar is up about half a per cent against the euro for the week.

In fact, it's touched a fresh record high almost every day it seems.

At 83.3 euro cents, the dollar is on course to notch up its ninth weekly advance in a row.

This blogger started to look back over the years to be sure that the winning run is the longest since the euro's creation in 1999. (Got as far back as 2007 before the charts froze. Will try again later.)

3.09pm:The Aussie dollar, meanwhile, is holding its ground after the China GDP release pushed it about one-third of a US cent higher.

It's currently buying about $US1.017.

Taking a longer view, though, the dollar is on course for its first weekly drop against the greenback in five weeks. (Still, there's a few hours to go, including US trading.)

2.54pm:Some latish M&A news:

IOOF Holdings is to acquire fellow wealth management advisory group Plan B Group Holdings in a friendly, $49.1 million off-market takeover.

The acquisition of Plan B, which is also the majority shareholder of the My Adviser financial planning group, will add $2.2 billion to IOOF’s funds under management.

Under the terms of a bid implementation deed announced, IOOF has agreed to pay 60 cents a share for each Plan B share, reduced by Plan B’s fully franked dividend of three cents a share.

(I suppose you can say IOOF has a Plan B.)

2.45pm: Coal magnate Nathan Tinkler's bid to take Australia's Whitehaven Coal private is struggling as potential partners for the estimated $5 billion plan fret about the outlook for coal prices, sources said, further denting the miner's shares.

Whitehaven, Australia's No.2 independent coal miner, said last month it had received an "incomplete" offer from top shareholder Tinkler, sending its shares up close to 10 per cent.

But with hopes of a Tinkler bid fading, Whitehaven stock has slumped to a near three-year low.

It fell as much as 8 per cent to $3.25 today, taking losses so far this month to more than 20 per cent.

Tinkler has debt support for over $US2.5 billion from UBS, JPMorgan and Barclays, but is struggling to cobble together an equity consortium, said a source who declined to be named as talks are confidential.

The debt, combined with his 21.4 per cent stake in Whitehaven, would take him close to just $US3.5 billion - still well short of a bid that would get board approval, the source said.

Click here for the full story.

2.32pm: IHS Global Insight’s Ren Xianfang pointed out that the six quarters of consecutive economic deceleration has been even longer than seen during the Asian financial crisis.

But what is more worrying, Mr Ren said, was China’s apparent inability to absorb slower growth.

‘‘A 7.8 per cent growth in the first half already feels quite hard in terms of impact, inflicting huge pains: downward spiral of producer prices, surging manufacturers’ inventories, plunging profits, bankruptcies and pay cuts,’’ he said.

Looking ahead, Mr Ren said, another interest rate cut, continued appreciation of the Chinese yuan and other government stimulus should help lift China’s economic growth rate.

‘‘The government has the tools to revive the economy – we are expecting about 7.9% growth this year,’’ Mr Ren said.

2.23pm: BusinessDay's Michael Pascoe has filed: China's soft landing proceeds to plan.

The alleged market relief rally on the back of China publishing 7.6 per cent annualised growth for the latest quarter is as silly as most excuses for a Friday bounce, but it sounds much better than saying Sydney is enjoying a superb mild and sunny afternoon (which it is) when rain had been forecast (which it was).

With the average economist apparently guessing the figure would be 7.7 per cent growth, it had been enough to add Chinese bricks to the wall of worry being built about a global slowdown, so on the face of it, 7.6 per cent should not be a reason for relief – unless the whole carry on about a sub-8 figure was a nonsense to begin with (which indeed it was).

With some perspective, 7.6 still counts as being “about” 8 per cent – which would be a very healthy number for China to maintain once the headline seekers retreat from comparing it with the unsustainable double digits of yesteryear.

2.11pm: Here's a look at how markets across the region are performing after China's growth announcement:

• Japan (Nikkei): +0.37%
• Shanghai: -0.03%
• Taiwan: -0.21%
• South Korea: +1%
• Singapore: +0.21%
• New Zealand: flat

2.03pm: Interesting read from the small biz desk ... When it comes to collecting money from customers, cafes have traditionally been low-tech – a couple of gold coins for a coffee, maybe a card payment for a bigger order. But Shawn Karakashian, of Get York Coffee in Sydney's CBD, is at the forefront of a revolution that is changing the way small businesses take payments and keep track of their customers.

Click here for the full story.

1.56pm: Decisions by global technology companies are probably the main reason why Australians pay much more than shoppers overseas for downloads of music, films and software, a government department says.

But the Department of Broadband, Communications and the Digital Economy has also played down the case for tougher laws that would force foreign companies to charge Australians less.

With some products on iTunes costing twice as much here as overseas and software also costing significantly more, a parliamentary inquiry is calling on firms such as Apple and Microsoft to explain the gap.

Click here for the full story.

1.47pm: ANZ CEO Australia Philip Chronican, meanwhile, has this to say on the outlook for rates:

“Recent news from Europe has helped somewhat in stabilising offshore funding markets and while we are pleased with recent developments the situation remains volatile and we continue to monitor events closely."

For what's worth, financial markets are currently pricing the prospect of another quarter-point interest rate cut by the RBA on August 7 as about a two-thirds chance.

1.37pm: Perhaps not the biggest surprise of the day, but ANZ has just released its second-Friday-of-each-month rates update.

And yes, variable interest rates for retail mortgages and small-business lending remain unchanged.

The standard variable mortgage rate is 6.8 per cent.

1.22pm: Charlie Aitken, Managing Director of Bell Potter Wholesale, on the market response to the China numbers:

1.09pm: Australian shares are holding onto the gains delivered by China's GDP figures. The All Ords and ASX200 remain 0.7 per cent higher and could break a six day losing streak. The last time Aussie stocks went seven days without a win was to the start of July 2010.

12.55pm: Here’s a few thoughts from ANZ on China:

• The Q2 GDP growth suggests that China’s slowdown was more severe than expected. While we think a rebound is under way, the cyclical rebound will be a moderate one because of the lack of policy conviction and the still uncertain global outlook.

• We thus cut our 2012 GDP forecast to 8.2% from 8.6% previously, with risks biased to the upside.

• Given that monetary policy has been catching up aggressively and the authorities have explicitly called for increased investment to accelerate growth, we believe an investment-led growth rebound can still be expected from Q3 onwards.

• However, if the government would neither relax its harsh property control policy nor honor its ambitious 7-million-unit public housing program, we believe growth momentum could remain sluggish in the remainder of the year. Indeed, the risks of growth of falling into a slippery downward path would increase sharply.
  

12.51pm: While we're on the subject of economic growth in Asia, South Korea's central bank has lowered its 2012 economic growth outlook to three percent, citing a global slowdown and the eurozone debt crisis.

The Bank of Korea's previous forecast in April was 3.5 per cent. Its revised figure was lower than the government's forecast of 3.3 per cent.

The downgrade came a day after the central bank unexpectedly cut its key interest rate for the first time in more than three years.

12.47pm: CMC Markets chief market analyst David Land said there has been a growing chorus of nervousness which was quelled with the release of Chinese data.

‘‘Anything in line with expectations is seen very favourably by the market,’’ he said.

Along with the miners, local banks also improved, with National Australia Bank gaining 13 cents at $23.59, ANZ shooting up 24 cents to $22.42, Commonwealth Bank rising 26 cents to $53.77, and Westpac finding 25 cents at $22.12.

12.44pm: And the big miners were among the beneficiaries. Both BHP and Rio shares rose by almost 1 per cent 1% in the space of minutes.

12.41pm: For what it's worth, the market jump of about two thirds of a per cent when China released its GDP number added - momentarily - about $8 billion to the national bourse. It's only on paper, of course, but it shows the sort of relief investors felt at a solid Chinese number instead of something fuelled fears of a deepening slowdown.

12.34pm: More sobering news for the Flying Kangaroo. Qantas has plunged while rival Virgin Australia has surged in the annual awards ranking the world's best airlines. For the second year in a row, Qatar Airways took out the Airline of the Year award for best airline in the world. Fairfax's online travel editor Craig Platt writes:

Qantas fell out of the World Airline Awards' top 10 for the first time, dropping to number 15 from number eight last year. The airline's ranking has sunk every year since 2008, when it peaked at number three. This year's drop comes in the wake of last year's industrial dispute that saw CEO Alan Joyce ground the airline's entire fleet in October, affecting about 68,000 passengers worldwide. Full story.

12.29pm: While the China numbers beat expectations, they still represent a further slowdown. China’s growth slowed for a sixth quarter, and takes the reading to a three-year low.

12.23pm: Reactions are starting to come in for the China GDP numbers. Commonwealth Bank currency strategist Joseph Capurso said the data wasn’t as bad as first feared.

‘‘It’s actually pretty close to market expectations,’’ Mr Capurso said.

‘‘The market got caught short just before the release of the data, but the Aussie dollar has lifted by about 20 points, or a fifth of a US cent.’’

12.19pm: If you need a silver lining in the China GDP numbers, it could be found in the retail sales. The statistics bureau said retail sales rose 13.7 per cent in June compared with a year earlier. Retail sales for the first half of 2012 were up 14.4 per cent year-on-year.

12.15pm: China's GDP for the year to the end of the June showed a slowing in the economy compared to last year. It came in at 7.9 per cent, above the expected result of 7.8 per cent but below the 8.1 per cent in the second half of last year.

12.11pm: More on China's GDP release. The median estimate in a Bloomberg News survey of 38 analysts was for a 7.7 per cent gain in gross domestic product. In the first quarter, the economy grew 8.1 per cent from a year earlier, previously released data show.

Industrial production rose 9.5 per cent in June from a year earlier, the report showed. That compared with the 9.8 per cent median forecast of 36 analysts.

Fixed-asset investment excluding rural households increased 20.4 per cent in the January to June period from a year earlier, the report showed. That compared with the 20 per cent median estimate in a Bloomberg survey.

12.04pm: The Aussie dollar added 0.02 US cents on the news. Not an especially strong reaction possibly because the numbers are in line with expectations or possibly a bit better than expected.

12.03pm: Slight correction: According to these numbers, China's GDP actually rose in the June quarter to 1.8 per cent after the March quarter was revised down to 1.6 per cent.

12.01pm: For the quarter, China's GDP has come in at 1.8 per cent, higher than expectations. The Australian sharemarket has jumped higher at on the news, adding half a per cent in minutes.

11.59am: China's GDP has come in at 7.6 per cent year-on-year, down from 8.1 per cent. More or less in line with expectations.

11.51am: Here's a great read to keep you entertained before China's announcement, BusinessDay's Peter Cai has filed the latest edition of Dragon Era:

The Chinese government got really concerned in the last few years over the remarkable ability of some investment banks and media outlets to predict the key economic figures such as GDP, CPI, and import and export figures pretty much spot on before their public release.

(Many years ago, special "early" services could be subscribed to from the stats bureau - complete with receipts - although that little earner got wound up in a hurry. Xinjiang exile probably awaited the geniuses behind the venture.)

Regulatory agencies also noticed suspicious movements in the sharemarket before important central bank interest rate announcements.An investigation was launched and resulted in the arrest and conviction of central bank and bureau of statistics officials and investment bankers.

The investigation reveals some tantalising details about the trade in classified economic data.

Click here for the full story.

11.42am: As much of the world waits on economic data from China, to be announced soon, here's a look at how markets across the region are performing:

• Japan (Nikkei): Flat
• Shanghai: -0.24%
• Taiwan: +0.17%
• South Korea: +0.14%
• Singapore: +0.16%
• New Zealand: -0.15%

11.33am: One from the small business desk ... businesses and employers have hijacked Facebook, writes blogger James Adonis, turning what was once just an online forum for mates into a marketplace of snooping, friending and spamming.

Click here for the full story.

11.19am: The miners are struggling a bit today but the banks are trading higher. Markets are sitting in a 0.2 per cent gain at the moment. The financial sub index on the ASX200 is 0.65 per cent higher. Among the big banks:

• CBA is 0.28% higher to $53.66
• ANZ is 0.7% higher to $22.34
• NAB is 0.6% higher to $23.60
• Westpac is 0.78% higher to $22.04

11.07am: Andrew Salter, foreign exchange strategist at ANZ, says the reaction of the Aussie dollar to the Chinese GDP numbers will depend on how far the result veers from market expectations of 7.7 per cent, and on how investors judge the Chinese authorities will respond

‘‘If, for example, it’s a 7.5, that would be reasonably disappointing,’’ Salter says, adding that he would not be surprised if the dollar dropped today and slipped towards parity early next week.

Mr Salter says China’s recent willingness to cut interest rates and pump money into the economy may reassure investors that authorities will continue to treat any signs of ailing growth. If the market believes China’s government will react quickly to hiccups, the dollar should remain relatively stable, he says.

ANZ expects China’s annual GDP growth to be 8 per cent today, and to climb to 8.6 per cent by the end of the year.

11.01am: Looking now at the early sliders on the ASX200:

• Coalspur: -6.25%
• Whitehaven: -4.53%
• Intrepid Mines: -3.12%
• Iluka: -2.45%
• Pacific Brands: -2.11%
• Fortescue: -2.06%

10.57am: DuluxGroup has again extended its takeover bid timetable for building products supplier Alesco Corporation as it gradually convinces more shareholders to accept its $188.4 million offer.

The paintmaker said it had built up its stake in the takeover target to 29.9 per cent after receiving strong support for its bid from Alesco’s institutional investors in the past two weeks. As a result, Dulux has extended the cut-off period for Alesco shareholders to accept its offer from July 20 to August 3.

It has also waived a number of conditions attached to the offer, including confirmation of Alesco’s earnings and regulatory approvals.

10.54am: The early gain by Evolution Mining comes after the gold explorer, which has operations in Western Australia, said output is up 15 per cent versus March quarter production.

10.50am: Here are the early gainers on the ASX200:

• Evolution Mining: +5.14%
• Silver Lake Resources: +4.31%
• APN News & Media: +4.27%
• Billabong: +4.23%
• BlueScope: +3.57%
• Lynas Corp: +2.99%

10.45am: In media news, Elisabeth Murdoch will step down as chief executive officer of Shine Group, the television production business she founded in 2001, to focus on her role as chairman as the News Corp. unit expands.

Murdoch, 43, will be succeeded by Chief Operating Officer Alex Mahon in September, Shine said in a statement today. As chairman, Murdoch will “concentrate on identifying future strategic opportunities,” she said in the statement. Mahon joined Shine in 2006. Shine, based in London, England, was acquired last year by News Corp, which is run by Elisabeth Murdoch’s father, Rupert Murdoch, 81.

In the past three years, Shine has established operations in Australia, Germany, France and Spain and added children’s entertainment. Rupert Murdoch said in June that he will split News Corp in two, spinning off the publishing division, which has been buffeted by ethics scandals in the U.K. and declining circulation.

10.37am: Credit ratings agency Moody’s has downgraded Italy’s government bond rating two notches on concern that deteriorating financial conditions in Europe will lead to a sharp rise in borrowing costs.The agency lowered the rating from Baa2 to A3.

It said fragile market confidence and risk of contagion from financial problems in Greece and Spain had increased the risks Italy faced. Moody’s also said it was worried about a diminished willingness among overseas investors to buy the country’s bonds.

10.29am: Looking at how the various sub indices on the ASX200 are performing:

• Utilities: +0.55%
• Financials: +0.39%
• Consumer staples: +0.37%

• Telecoms: -0.5%
• Health: -0.37%
• Energy: -0.15%

10.24am: Fortescue has endured a rough start to the day following yesterday's 6 per cent loss. The company's shares have lost another 2.38 per cent to $4.51. It was trading above $5 as recently as last week.

• BHP is 0.16% lower to $30.35
• Rio is 0.63% lower to $53.91

10.18am: In early trade, the All Ordinaries index is 2.6 points higher, or 0.1 per cent, to 4108.6, while the benchmark S&P/ASX200 is 4.1 points higher, or 0.1 per cent, to 4072.1.

On the ASX 24, the September share price index futures contract was down six points at 4,032, with 6,245 contracts traded.

10.12am: Shares in BHP have slipped again and are in danger of falling below the $30 mark. They reached an intraday low of $30.09 yesterday, the lowest point since March 2009. They are currently 0.4 per cent lower today to $30.29.

10.11am: Shares in Specialty Fashion Group are 1.9 per cent lower, or 1 cent, to 51 cents after the company warned its full year earnings are likely to halve after suffering a drop in sales.

10.05am: Early take - shares edging lower. Down 0.1 per cent as the market opens.

10.01am: Credit Suisse data gives a 25 basis point rate at the next RBA board meeting a 71 per cent chance. That number could move today when China delivers its GDP data. A weak reading, which suggests falling demand for Aussie exports, could give boost the chances of a move by the RBA support the local economy.

Credit Suisse forecasts rates will be 109 basis lower in 12 months time to 2.5 per cent.

9.55am: Australian three-year bond futures prices are higher ahead of the release of key Chinese economic data, and the yield on 1-year notes fell as much as 2.9 basis points to a record low of 2.289 per cent.

ANZ head of interest rate research Tony Morriss on Friday said local bond futures remained high overnight after rallying on weaker Australian employment data.

‘‘The market is looking for confirmation that growth in China is slowing, so it wouldn’t be surprising to see the rally continue,’’ he said.

However, he said, the relative strength of the Australian economy meant bond futures prices were likely to lose ground next week. At 8.30am the September 10-year bond futures contract was trading at 97.215 (implying a yields of 2.785 per cent) unchanged from Thursday. The September three-year bond futures contract was at 97.860 (2.140 per cent), up from 97.840 (2.160 per cent) previously.

9.51am: And finally on Specialty Fashion, it joins other retail-related companies to issue a downgrade in recent weeks. Others include Billabong, Myer, Harvey Norman, JB Hi-Fi, David Jones and Kathmandu.

9.49am: Specialty Fashion Group will also continue to close stores in an effort to maximise gains in high turnover areas and grow online sales.

After the closure of 21 stores in the second half of the 2012 financial year, SFG reported positive impacts on revenue, recording $265 million for the six months to June 30, 1.4 per cent higher than the same period in the previous year. Total revenue for the 2012 financial year was $573 million.

9.46am: Womenswear retailer Specialty Fashion has warned its full year earnings are likely to halve after suffering a drop in sales.

In an earnings update today, the retailer said revenue for the year to June 30, 2012, was likely to be flat at $573 million as a result of tough trading conditions.Like-for-like sales, which exclude the impact of store openings and closures, were down 3.4 per cent.

Specialty, which owns the Katies and Millers chains, said it expects 2012 full year earnings before interest, tax, depreciation and amortisation (EBITDA) to be $21 million-$22 million.

9.43am: There's a big list of analyst rating changes for today:

• BHP cut to 'neutral' from 'outperform' at Credit Suisse
• Sandfire Resources initiated with 'buy' at RBS
• Sandfire Resources cut to 'neutral' from 'outperform' at Credit Suisse
• Evolution Mining upgraded to 'outperform' from 'neutral' at Credit Suisse
• Ansell cut to 'hold' from 'buy' at RBS
• Ramsay Health reduced to 'sell' vs 'hold' at RBS
• Sonic Health downgraded to 'hold' vs 'buy' at RBS
• Brambles upgraded to 'buy' from 'neutral' at BofA-Merrill Lynch

9.39am: Paul Bloxham, chief economist at HSBC, expects China’s year-on-year GPD growth to clock 7.8 per cent, which is in line with the 7.7 per cent prediction from economists surveyed by Bloomberg.

‘‘There is clearly a slowdown in China happening at the moment,’’ Bloxham says. ‘‘A key question is firstly how much has China slowed down, and the second question is when will it stop slowing down and when will it start to pick up.’’

While economists often quibble about the reliability of Chinese data, Bloxham says Australian investors now pay intense attention to any numbers released by their major trading partner.

‘‘Locally, you only have to go back a couple of years and we were very focused on every piece of data that came out from the US,’’ Bloxham says. ‘‘There’s been a marked change now, with a lot more focus on China.’’

9.35am: The SPI futures index points to a flat start today but offshore markets fell and the dollar is weaker against the greenback and the euro so the early leads are fairly weak.

But local markets could be in a holding pattern until midday when China releases second quarter GDP data. A Bloomberg survey of economists forecasts Chinese growth to have slowed to 1.6 per cent in the three months to June, down from 1.8 per cent in the first quarter of 2012. For the year, growth is expected to have eased to 7.7 per cent from 8.1 per cent.

If the data comes in at 7.7 per cent the year, that would be the weakest reading since the first quarter of 2009.

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 flat at 4038
  
• The $A was trading at $US1.0138
  
• In the US, the S&P500 lost 0.5% to 1334.76
  
• In Europe, the FTSE100 lost 1% to 5608.25
  
• Gold lost 0.6% to $US1567.02 an ounce
  
• WTI crude oil added 27 US cents to $US86.08 a barrel
  
• RJ/CRB commodities index lost 0.52% to 290.27

9.30am: Good morning folks. Welcome to the Markets Live blog for Friday the 13th - an omen?

This blog is not intended as investment advice

BusinessDay with agencies