Australian shares have closed slightly lower, led down by BHP, but trimming earlier losses on hopes of a Greek debt deal.
4.45pm: That's all for today. Thanks for following us; we'll be back tomorrow morning at 9.30am.
For a wrap of today's session, click here.
4.22pm: Macquarie, which rose 0.6 per cent today, may have its debt rating cut by Fitch as the investment bank faces earnings volatility from its advisory, broking and trading units.
The long-term issuer default rating of Macquarie, currently at A, was placed on watch negative, Fitch says, adding the move is part of a ‘‘broad review’’ of the largest banks around the world.
4.19pm: Telstra was another big loser of the day, falling 2 per cent after posting a lower than expected profit.
The big banks added between 0.05 per cent (ANZ) and 0.9 per cent (Westpac).
4.16pm: Losses were led by the materials sector, down 0.7 per cent, and more specifically by market heavyweight BHP, which fell another 1.6 per cent after yesterday's earnings report disappointed investors.
The slide in BHP alone shaved nearly 8 points off the index - taking the miner oit of the equation, the market closed flat.
4.12pm: The market has closed, recovering well from the day's lows in the wake of a jump in China's inflation. The benchmark S&P/ASX200 index slipped just 8.2 points, or 0.2 per cent, to 4282.5, while the broader All Ords shed 7 points, or 0.2 per cent, to 4356.7.
4.07pm: China's annual inflation spike to a consensus-busting 4.5 per cent in January has forced a market rethink of policy easing expectations.
Economists say it is likely to have squeezed out any remaining expectation of a near-term cut to bank reserve ratio requirements, a move confidently predicted in the run-up to Lunar New Year but which failed to materialise.
"The CPI does cut into room for further monetary policy easing for now. We don't think there will be an RRR cut before March," Wei Yao, China economist at Societe Generale in Hong Kong, says.
4.00pm: The markets remain in the grip of the Greek debt negotiations marathon. After earlier slipping after talks ended unsuccessfully for the night, investors now seem to be hoping that a deal will be struck later today.
The Australian dollar has erased earlier losses after a Greek official said the government is confident euro area finance ministers meeting today will approve a second financing accord for the country.
The dollar is trading at $US1.08.
3.50pm: Greek PM Lucas Papademos has confirmed that the country's political leaders failed to sign off on a tough reform and austerity program, the price of a new international bailout for the nation. But he says they will try to strike a deal within hours.
Speaking after seven hours of negotiations, after midnight local time, Papademos said chiefs of the three parties in his coalition had agreed on all the points to secure the 130 billion-euro bailout, bar one - pension cuts.
Meanwhile, Greece has been given two weeks to identify fiscal savings worth 300 million euros under a new bailout deal with the EU and IMF, a senior Greek government official said.
Greece undertook to find total budget savings of 3.3 billion euros or 1.5 per cent of GDP this year. By early this morning, locla time, savings had been agreed to cover all but 300 million euros of that amount.
3.45pm: More than 5000 Australians affected by the collapse of investment manager Trio Capital will receive their share of $54 million in compensation payments over the next two weeks.
Financial Services Minister Bill Shorten says the money will be progressively credited to their superannuation accounts from today.
Investors lost $125 million after Trio Capital collapsed in 2009.
3.40pm: Stocks have recovered somewhat from the Chinese inflation shock earlier in the afternoon. BHP is still the main drag on the ASX200, lopping nearly 10 points off the index as investors weigh up yesterday's profit drop.
Telstra is also weighing in the index, taking another 3.4 points off, after the telco's profit came in slightly below expectations.
3.29pm: Gold is also trading flat, holding above $US1730 an ounce, as a surprisingly high China inflation number supported prices, while investors also focused on Greece's debt talks for direction.
"Once the higher CPI (consumer price index) came out, inflation worries prompted traditional buyers to come in quickly," says a US-based trader.
3.26pm: In other markets, Brent crude is holding steady above $US117 on hopes of demand growth revival as Greece inches closer to getting its debt crisis under control while concerns over supply disruption from the Middle East provided added support.
Front-month Brent gained 16 cents to $US117.36 a barrel, rising for an eighth straight day, after ending at a six-month high. US crude added 13 cents to reach $US98.84 a barrel in its third day of increases.
"There is hope that the Greek debt crisis will be sorted out soon with an agreement on all the components getting discussed," says Natalie Robertson at ANZ. "On the supply side, there are a lot of risks at the moment and that will keep prices supported, particularly Brent."
3.22pm: There's been some speculation that struggling Yahoo might have to sell its Asian assets, among them its stake in China's eBay, AliBaba.com. Now something could be happening there.
Trading in Alibaba shares was suspended today, pending an announcement regarding its parent, Chinese e-commerce giant Alibaba Group, which is reportedly planning to buy back the 40 per cent stake in it held by Yahoo.
Sources told Reuters last month that Alibaba Group was planning to raise $US3 billion via a loan, which it would use to buy back part of the 40 per cent stake held by Yahoo. The sources said then that Alibaba was looking to put together a group of 6-7 banks by early February.
Yahoo's stake in Alibaba Group could be worth up to $US13 billion, based on the $US1.6 billion paid for a 5 per cent stake in Alibaba by Yunfeng Capital, Silver Lake and other investors in November.
3.15pm: Tighter margins for the banks, though, may not win a lot of sympathy with the wider public, as BusinessDay's Chris Zappone examines here: Will ANZ burst the dam of public anger?
3.11pm: We've also been running this commentary by Macrobusiness commentator Leith van Onselen, noting that the banks may have to raise rates to preserve margins or stop lending: Lenders' strike looms without rate relief.
3.07pm: Bit of bank news around. For starters, Bank of Queensland say they will leave their lending rates on hold - a bit of a pre-emptive strike against ANZ should they hike their lending rates tomorrow.
2.15pm: Here's how the rest of the region is doing (mostly lower:
- Japan (Nikkei): -0.6%
- Hong Kong: (-0.2%)
- Shanghai: flat
- Taiwan: +0.1%
- Korea: -0.6%
- Singapore (-0.2%)
1.55pm: Property group Sunland has warned that its profits will likely take a hit this financial year, citing a drop in sales amid a tough market.
The Gold Coast-based developer, which owns the five-star Palazzo Versace hotel, expects full-year net profit of between $14 million and $15 million. This is down about 30 per cent on the past year to June 30, when the group posted a net profit of $21.4 million.
Sunland shares have slumped 7.3 per cent to 69.5 cents, making them the second biggest loser in the All Ords (behind Platinum Australia).
1.44pm: Telstra chief David Thodey says Telstra’s board is yet to decide on what capital management plans the telco will go with once its participation in the NBN is confirmed, a decision he believes the ACCC will make soon.
Some market analysts have speculated Telstra would announce plans to conduct a share buyback as a result of the NBN agreement.
Thodey says the board was committed to look at capital management once when the deal was finalised.
1.40pm: An unusually weak Christmas for credit cards suggests the end of year spending malaise may have extended beyond retail stores.
Credit card application figures released by rating agency Veda show requests for cards in the December quarter were down 9.9 per cent on the year before.
Veda consumer risk chief Angus Luffman says the decline is unusual.
“The final quarter is typically a time when there is stronger demand for credit,” he says. “Our figures support other data suggesting consumers are becoming more circumspect.”
1.34pm: Some speculation going on which assets BHP will sell, a move flagged by CEO Marius Kloppers in December.
- Deutsche Bank tips the miner will sell about $US10 billion worth of aluminium, nickel and coal mines.
- Candidates for sale are the $US4.7 billion Cannington silver, lead and zinc mine and the $US1 billion Worsley alumina smelter in Australia, Deutsche says.
- Other options include the company’s aluminium unit, which is valued at $US2.2 billion and includes smelters in South Africa, a stake in a smelter in Mozambique and bauxite mine in Brazil, as well as its coal mines in New Mexico, valued at $US792 million, and its Nickel West operations in Australia at $US1.3 billion.
- BHP could also sell its Yeelirrie uranium project in Australia and some petroleum assets, Citigroup says.
1.23pm: Perhaps foreshadowing tomorrow's announcement by the ANZ on its interest rates stance, Bank of Queensland says it will keep its standard variable home loan interest rates steady, in line with this week’s decision by the RBA.
Interest rates will be kept steady until the next RBA meeting in March, regardless of movements by other banks, BOQ said.
1.11pm: Like equities markets, the Aussie dollar is having a down day and the Chinese inflation data pushed it to an intraday low. At 12.30pm the AUD slid to $US1.0739, down more than half a US cent from yesterday's close. Earlier today, it rose to $US1.0806, but the stronger-than-expected Chinese inflation reading saw it dip sharply before mounting a recovery. It was recently buying $US1.0766.
12.59pm: Australian shares, meanwhile, looked poised to hit a 1 per cent loss for the day. Both the All Ords and the ASX200 are now 0.9 per cent lower with very little on the radar that could cheer them to a recovery.
Telecomms, thanks to Telstra, are 2.2 per cent lower. Metals and mining stocks have lost 1.9 per cent. Materials are 1.7 per cent lower. Info tech stocks are 1.3 per cent lower.
Energy stocks are 0.2 per cent higher and the consumer discretionary sub index is 0.2 per cent higher.
12.52pm: The rise in Chinese inflation is the first since July and it helped push markets lower. The Shanghai Composite Index slipped 0.1 per cent to 2345 shortly after the data was released.
‘‘Inflation is supposed to be on a slowing trend,’’ said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. ‘‘The government is still reluctant to ease policies aggressively.’’
12.43pm: The rebound in Chinese consumer prices follows a weeklong holiday in January which saw spending and food price gains. But not everyone expects the price growth to continue, or even hold steady.
‘‘Inflation will moderate in coming months and fall below 3 percent by mid-year,’’ Chang Jian, a Hong Kong-based economist at Barclays Capital, said before today’s release.
Even so, the government may not relax policies aggressively as ‘‘they remain cautious about upside risks to imported inflation from commodity prices’’ and a possible rebound in economic growth ‘‘if the European situation improves,’’ Chang said.
12.36am: The Chinese inflation numbers are in, and consumer prices have surprised in the upside. CPI for January year on year came in at 4.5%, a full half a per cent higher than expectations, and 0.4 per cent than December.
Producer prices, on the other hand, were slightly weaker. The PPI came in at 0.7% for January year on year. That compares with the 0.8 per cent median estimate in a Bloomberg survey and a 1.7 per cent gain the previous month.
12.31pm: Meanwhile, it pays to work for a massively successful technology company. Facebook’s top executives, including CEO Mark Zuckerberg, are eligible for twice-a-year bonuses of up to 45 per cent of their base salaries and other earnings, according to reports today.
12.28pm: Today's worsening share slide wrong-footed voters in this morning's poll. Thirty nine per cent of voters said the market would close flat to 0.5 per cent higher. At this stage, it doesn't look like the market will closer higher or even, at best, flat.
12.23pm: Sims Metal's losses today, following a $614 writedown in, are the most in three years. The shares plunged as much as 12 per cent to A$13.45, the biggest decline since Jan. 23, 2009, but had clawed some of the losses. They were recently trading at $14.26.
12.14pm: Peter Esho, chief market analyst City Index, says today’s losses are related to the softer than expected Telstra result.
"The Telstra result is driving the market slightly lower, the stock is down 2 per cent. Their sales revenue growth was a little below market expectation, they have reaffirmed guidance but no firm update on the NBN deal," he said.
But Telstra is not alone. Shares in BHP Billiton fell 1.7 per cent, extending a 0.4 per cent dip yesterday after the company reported profit before exceptionals fell to $US9.94 billion for July-December from $US10.7 billion a year ago.
12.05pm: Bit more from Stockland, with Australia’s biggest residential communities developer saying it's interested in acquiring some of Centro Retail Australia’s malls.
"There are certain limited assets that Centro own that we would have an interest in, that fit within our strategy,” Managing Director Matthew Quinn told Bloomberg. Stockland hasn’t approached Centro to express its interest, he said.
Stockland today reported net income that fell 28 per cent to $307.6 million in the six months ended December 31. Underlying profit declined 7.8 percent to $350.8 million.
Centro Retail, the $4.4 billion property trust created from the restructure of Centro Properties Group and its managed funds, is still largely owned by its former creditors, mostly hedge funds. Former Centro Properties Chief Executive Officer Robert Tsenin said in December the company continued to receive offers for its assets even after its reorganisation was approved.
11.57am: As our index page shows, materials are down 1.4 per cent and financials 0.9 per cent to be the main drags. Energy and consumer staples are bucking the trend, with both sectors up about 0.4 per cent.
11.54am: Shares, meanwhile, look like ending the morning session near their lows for the day, off about 0.7 per cent.
11.49am: Meanwhile, BusinessDay's Malcolm Maiden looks here at Telstra's balancing act:
It seems that Telstra chief David Thodey is still managing the balancing act.
Revenue in the crucial mobile telephony business is up almost 11 per cent in the latest half, and mobile profit margins were 34 per cent in the half, down one notch from 35 per cent in the June half last year. But that's up from 29 per cent in the December 2010 half, and broadly in line with margins of 34 per cent and 35 per cent in the 2009 and 2010 June financial years.
11.32am: And here's that NAB survey, with some positive views included:
Australian business conditions improved last quarter as an industry survey found a pick-up in sales, profitability and employment, while firms also became more optimistic on the outlook for the coming 12 months.
National Australia Bank's quarterly survey of more than 900 firms showed its measure of business conditions rose to 2 in the fourth quarter of last year, compared with minus-3 the previous quarter. That was a point above the long-run average.
Its measure of business confidence firmed to 1 from minus-3, likely reflecting rate cuts from the Reserve Bank of Australia (RBA) in November and December and some lessening in concerns over the European debt crisis.
The survey's measures of sales, profitability and employment all showed improvement last quarter, consistent with an economy growing around the long-run average of 3.25-3.5 percent a year.
11.29am: Telstra shares, though, might get a bit of a kick with Australia's largest phone company saying it's considering all forms of capital management, including a special dividend.
"All options are on the table," Chief Executive David Thodey said, adding no final decision had been made and tax ramifications would be evaluated.
The company affirmed earlier it would look at capital management options if its $11 billion deal for the National Broadband Network gets final approval in coming weeks. Analysts are tipping a share buyback.
11.22am: Of course, economic optimism has to be tempered with the massive work still to be done to restore health to much of Europe's economy.
The latest debt deal talks on Greece have stalled on pension cuts, and that's part of the reason why the market is down today.
(Telstra's results disappointed and that stock is the second-biggest drag on the market this morning.)
11.14am: We'll get NAB's latest economic survey at the bottom of this hour, which should help update us on the state of the local economy.
Interesting that interest rate futures have now retreated to close to an even-money bet that the RBA will cut its cash rate on March 6, according to Credit Suisse.
Also noteworthy is the expectations for rate cuts over the next 12 months have sunk to just over two cuts. Another way of putting is that optimism in the economy is on the up, and hasn't been this bullish (in terms of forward rate cuts) since August last year.
10.56am: BHP shares are still down today after yesterday reporting a drop in first-half profit of 5.5 per cent, to $US9.941 billion ($A9.3 billion). Burrell Stockbroking director Richard Herring said the market was still absorbing BHP’s profit result.
‘‘These strong commodity prices aren’t going to last forever,’’ he said.
‘‘We need to concentrate on increasing production to keep those revenue levels there. And Telstra reported this morning, that was just a little bit light. That’s weighing on the index as well.’’
10.49am: Looking ahead, some inflation numbers out of China will arrive about 12.30 today. A Bloomberg survey shows a slight weakening is expected in both consumer and producer prices:
- CPI for Jan - up 0.8% year on year, compared with 1.7% in the same period last year
- PPI for Jan - up 4% year on year, compared with 4.1% in the same period last year
10.41am: The miners haven't fared so well:
- BHP is 1.48% lower to $37.2
- Rio is 0.95% lower to $71.08
- Fortescue is 1.3% lower to $5.36
10.37am: The big banks have posted a positive start to the day in a sagging market:
- CBA is 0.18% higher to $50.41
- ANZ is 0.23% higher to $21.66
- NAB is 1.1% higher to $23.18
- Westpac is 0.33% higher to $20.97
10.31am: To some of better performed companies on the ASX200:
- Aurora Oil & Gas - up 4.3%
- Tabcorp - up 2.97%
- Wotif.com - up 2.49%
- Flight Centre - up 2.06%
- Bathurst Resources - up 2%
10.27am: Foxtel has announced an increase in subscriber numbers for the second half of 2011 despite a tough consumer market.
Subscription revenue increased by 5.1 per cent as the number of households opting for Foxtel’s pay TV service jumped to 1.58 million, an increase of more than two per cent, the company said in a statement today. The total number of subscribers, including wholesale subscribers and customers in the installation queue, rose to 1.66 million.The company’s half-year profit before tax was $107 million.
10.24am: Companies lagging the broader ASX200 so far this morning include:
- Aquarius Platinum - down 4.4%
- Alumina - down down 4.28%
- Navitas - down 3.3%
- Westfield Group - down 2.3%
- Telstra - down 2.3%
10.20am: Qantas has announced that it will inspect its entire fleet of Airbus A380 superjumbo jets for cracks on parts inside the wings. The airline said it would check all 12 of the aircraft it operates for structural damage following directions from the European Aviation Safety Agency (EASA).
Qantas said the cracks were ‘‘not related to the turbulence, or specific to Qantas’’, but had been traced back to a manufacturing issue, and had no effect on flight safety.
10.17am: The All Ordinaries index is 16.9 points lower, or 0.4 per cent, to 4346.8, while the benchmark S&P/ASX200 is 18.4 points lower, or 0.4 per cent, to 4272.3.
10.14am: Sims Metal, meanwhile, has been pummelled on news that it would incur a $614 million writedown on the value of its North American business. Its shares have lost 12 per cent, or $1.77, to $13.49.
10.11am: To some the shares prices of some of the companies in the news today:
- Telstra - down 2.3% to $3.36
- Tabcorp - down 2.1% to $2.92
- News Corp (B shares) - 0.9% to $18.91
10.06am: Early take - Shares down about 0.2 per cent.
9.59am: Property group Stockland’s first-half net profit has fallen by 28 per cent due to tough economic conditions, the company said in a trading update today, but it expects a better performance in the remainder of the financial year.
Stockland reported a net profit of $307.6 million in the six months to December 31, 2011, down from $425.1 million in the previous corresponding period.
‘‘Economic conditions were very tough at the start of FY12 resulting in poor consumer sentiment, reduced discretionary spending and weaker demand for Sydney CBD office space which affected our result,’’ managing director Matthew Quinn said in a statement.
9.55am: Australian bonds have opened slightly higher. At 8.30am the March 10-year bond futures contract was trading at 95.970 (implying a yield of 4.030 per cent), up from 95.960 (4.040 per cent) on Wednesday. The March three-year bond futures contract was unchanged at 96.480 (3.520 per cent).
ANZ senior economist Shane Lee said the market was watching for news from Europe, with the European Central Bank meeting tonight for a rates decision.
9.51am: Analyst rating changes for today:
- Ansell cut to 'neutral' at JPMorgan
- Ardent Leisure cut to 'neutral' at JPMorgan
- Macquarie cut to 'neutral' at Citigroup
- Toll cut to 'hold' at RBS
- Cochlear cut to 'hold' at RBS
9.48am: Scrap metal recycler Sims Metal Management has written down the value of its North American business by $614 million. The impairment charge relates to the goodwill, or the value of a business above the value of its assets, on acquisitions and joint ventures made several years ago.
Sims said that because the writedown of goodwill was a non-cash item it would not impact the company’s dividend policy, growth strategy, share buy-back plan or compliance with credit agreements. Sims will report its results for the six months to December 31 on February 17.
9.45am: Wagering and gaming firm Tabcorp Holdings has lifted its first half underlying profit by 14.1 per cent and expects a similar performance for the remainder of the year.
Tabcorp reported a net profit of $189.3 million for the six months to December 31, down from $265.5 million in the previous corresponding period.
But after accounting for the company's demerger of its casino business in 2011, which generated $99.6 million in profit in the previous corresponding period, first half net profit was up 14.1 per cent.
9.43am: Telstra, Australia's largest phone company, reported first-half earnings of almost $1.5 billion, a touch below expectations, as a jump in mobile subscribers was countered by a fall in sales at its Yellow Pages Sensis business.
Telco reporter Lucy Battersby notes that Telstra added almost one million new mobile services in the six months ending December 31, which helped contribute to a 22.5 per cent increase in net profit of $1.48 billion, up from $1.2 billion the previous year.
9.39am: News Corp has also settled another round of phone hacking claims. A further 15 politicians, including comedian Steve Coogan, lawmaker Simon Hughes and ex-soccer player Paul Gascoigne reached settlements with the British newspaper arm of the Murdoch's company.
9.36am: News Corp, owner of Fox Broadcasting and the Wall Street Journal, reported second-quarter profit increased 65 per cent on higher television subscriber fees and advertising.
Net income gained to $US1.06 billion ($982 million), or 42 US cents a share, from $US642 million, or 24 US cents, a year earlier, the New York- based company said.
The earnings rise came despite the $US36 million ($A33.44 million) cost of restructuring the group’s British and Australian newspaper divisions. Much of that expense relaed to the controversial phone hacking investigations at its British tabloid News of the World, the company said.
9.32am: We're enjoying a busy start to the day with News Corp, Tabcorp and Telstra already reporting results. Some details on those results in a moment. First, check the need2know and the business press digest for all of this morning's news:
- The SPI was 3 points higher at 4260
- The $A was trading at $US1.079
- In the US, the S&P500 added 0.7% to 1348.03
- In Europe, the FTSE100 lost 0.24% to 5875.93
- Gold lost 0.8% to $US1731.79 an ounce
- WTI crude oil lost 54 US cents to $US98.95 a barrel
- RJ/CRB commodities index lost 0.07% to 314.7
9.30am: Hi folks. Welcome to the Markets Live blog for Tursday.
This blog is not intended as investment advice
BusinessDay with agencies
