Markets Live: Shares find some energy

Australian shares rose today but investors remained cautious as bailout takes continue in Greece.

4.58pm: That's all for today, folks. Thanks for joining us during the day; we'll be back tomorrow morning at 9.30am.

For the usual wrap of today's session, click here.

4.26pm: The dollar is still hovering around $US1.08, last trading at $US1.0797.

“When Greece’s second bailout is agreed, and if volatility remains low, then I can see the Aussie pushing higher,” Commonwealth Bank currency strategist Joseph Capurso says. “The European situation seems to be inching very slowly towards a resolution.”

4.22pm: Talking BHP results: CEO Marius Kloppers has blamed complex Labor workplace laws for creating the conditions for current strike action at the company’s coal operations.

Mr Kloppers said the current Fair Work Act made it difficult to negotiate with unions because more claims could be put on the table beyond just benefits and pay.

‘‘What we see in our experience around the world and in various places is that those places where essentially negotiations go around workers’ benefits and pay, normally you reach agreement in a facile manner,’’ he told reporters. ‘‘With changes in law, with things like prohibited content, the number of issues that can be put on the table which don’t only govern benefits and pay but extend to all manner of other things just makes it more difficult and makes it less likely that people reach an agreement.’’

Mr Kloppers blamed industrial action for partly contributing to underperformance by its copper and coal divisions in 2011.

4.19pm: BHP shares slipped 0.4 per cent after the miner reported a slightly lower than expected first-half profit. Rio rose 1.1 per cent and Fortescue jumped 3.2 per cent.

Among the big banks, ANZ added 1.2 per cent, while NAB fell 1.2 per cent, extending yesterday's losses. CBA dropped 0.4 per cent and Westpac slipped 0.1 per cent. Macquarie shares jumped 3.1 per cent.

4.15pm: All sectors bar utilities (down 0.2 per cent) closed in the black. Energy stocks led the gains, jumping 1.6 per cent. Materials rose 0.3 per cent and financials edged 0.2 per cent higher.

4.12pm: The market has closed, just off the day's high. The benchmark S&P/ASX200 gained 16.5 points, or 0.4 per cent, to 4290.7, while the broader All Ords rose 18.7 points, or 0.4 per cent, to 4363.6.

4.03pm: Final minutes now. Investors will be looking direction Greece tonight where the debt negotioations are expected to come to a conclusion. Greek Prime Minister Lucas Papademos will meet with the leaders of the three parties supporting his government today after late-night talks with international creditors.

3.44pm: Investors may be a bit hesitant today, but the general mood still seems to be upbeat.

‘‘I’m very bullish on the market,’’ says Laurence Fink, CEO of BlackRock, the world’s largest money manager. ‘‘I don’t have a view that the world is going to fall apart, so you need to take on more risk. You need to overcome all this noise and there are great values in equities.’’

3.37pm: The opposition says the federal government has opted for an unnecessary ‘‘Rolls-Royce’’ communications system by paying $620 million for two new satellites to provide high-speed broadband to remote parts of Australia.

NBN Co, the government-owned enterprise rolling out the national broadband network (NBN), has signed a deal with US firm Loral Space and Communications to make the satellites.

‘‘Don’t buy yourself a Camry, a Falcon - buy yourself a Rolls-Royce, a Bentley,’’ opposition communications spokesman Malcolm Turnbull told reporters. ‘‘Nothing but the best will do, nothing but the most expensive will do.’’

3.29pm:  Leighton subsidiary Thiess has won a $325 million contract to build a coal seam gas processing plant in southern Queensland. The contract involves the construction of six field compression stations and one central processing plant in the Surat Basin, which is near Dalby, to service QGC’s Queensland Curtis LNG Project.

Work will begin in February 2012 and is expected to be completed in April next year. At its peak the project will employ about 570 workers.

Leighton’s share price is trading 10 cents higher at $24.76.

3.21pm: China may ‘‘move shortly’’ to help Europe resolve its debt crisis by providing an investment of as much as 100 billion euros ($125 billion), says Yuan Gangming, an economist at the Chinese Academy of Social Sciences.

The money would probably go to the European Financial Stability Facility, the euro bailout fund, Yuan says, adding that the forecasts are his own and don’t necessarily represent government plans.

China, sitting on the world’s largest foreign-exchange reserves at more than $US3 trillion, has signalled a stronger willingness to aid Europe, which is the largest market for its exports.

3.05pm: All sectors with the exception of utitilities (-0.2%) are in the black, with gains led by energy stocks, up 1.4 per cent. Materials are up 0.1 per cent and financials have added 0.2 per cent.

2.42pm: Not a lot around to steer sentiment, today at least.

In Australia, we'll get Telstra, News Corp./Ltd and Rio Tinto results tomorrow and the RBA's quarterly statement on monetary on Friday.

Tonight in the US, we'll get a few big retail-related stats for January, including consumer confidence measures (and the Bloomberg 'Consumer Comfort' index). German trade and French business sentiment will be among the European economic offerings.

2.31pm: Back to the markets: Across the region every market bar Jakarta is up. The gains, though, are small, with the exception of 1.5 per cent in Taipei. Futures in the US and London are flat. One of those days.

2.21pm: BusinessDay mea culpa due: We reported earlier that Rio Tinto was facing a blowout in costs on its Pilbara expansion. In US dollar-terms, that seemed true. Rio in October 2010 said it would spend $US3.1 billion to expand output of iron ore to 283 million tonnes a year.

That figure has indeed swelled to $US3.4 billion now...but it seems in Aussie dollar terms there's no blowout after all. Apologies for the dud steer.

2.09pm: The RBA's decision is also playing out in the bond market, as Bloomberg notes.

The three-year government bond yield has surged 36 basis points, or 0.36 percentage points, since February 1 to 3.50 per cent, its biggest five-day advance since July 2009, after the RBA unexpectedly left its cash-rate target at 4.25 percent yesterday. Government bonds lost 0.5 per cent this year, the sixth-worst performance among 26 markets tracked by Bloomberg.

1.43pm: This blogger notes, of course, that those investors most got yesterday's decision wrong (although interbank rate futures were closer to the mark, paring the chances of a rate cut, as we noted on Monday.)

For what it's worth, those interbank futures view the chance of a rate cut in March at about 52 per cent, with about a four-in-five chance of two rate cuts by June.

1.36pm: Worth taking a peek at interest rate futures after yesterday's decision by the RBA to leave its cash rate on hold.

According to Credit Suisse, there's about a two-in-three chance that the RBA will cut its cash rate on March 6. That may surprise a few newspaper headline writers today.

1.17pm: More news on the mining front, this time from Fortescue Metals:

Fortescue Metals will have to meet strict conditions to minimise impact to flora and fauna associated with an expansion of the Cloudbreak iron ore mine in the Pilbara, Western Australia's Environmental watchdog announced today.

Fortescue has proposed an extension to its current open pit mine about 120 kilometres north of Newman by 8,133 hectares which would allow an ore production increase to about 50 million tonnes per annum and increase the life of the mine by more than 10 years.

The plan includes development of new pits and waste dumps, new infrastructure and dewatering and water disposal activities and an upgrade of the ore processing facility.

1.03pm: Looks like there are more job cuts coming in the banking sector, as BusinessDay's Chris Zappone reports:

The axe has swung again in the finance sector with the bank workers’ union claiming 65 positions will be sent offshore by Brisbane-based insurance and banking company Suncorp Group.

The Finance Sector Union said the company will send 65 jobs to India, in addition to the 203 positions already "offshored" in the past six months.

“The Australian finance sector is in the midst of an offshoring epidemic,” said FSU national secretary Leon Carter. “At this rate, employment opportunities for the next generation of finance workers will be severely limited.”

If you know more, contact Chris Zappone.

1.00pm: We noted earlier that NZ (but Singapore-based) billionaire Richard Chandler is buying $150 million worth of Gunns stock, as the company is thrown a lifeline.

Gunns shares as much as doubled in price for their biggest intraday in 27 years, Bloomberg reports.

Interestingly, analysts are viewing the rescue as extending to Gunns' controversial pulp mill at Bell Bay.

“If successful the proposal probably ensures the future of the company and the Bell Bay pulp mill,” said Peter Warnes, an analyst at Morningstar.  Others may take a different view.

12.48pm: Talking about Greece and the seemingly endless debt negotiations drama, CMC Markets' Tim Waterer says the situation is building to a ''crescendo'':

• Financial markets continue to constantly play the ‘waiting game’ in regards to Greece getting their house in order.
• Interestingly, it almost seems that the more the deadline is put back on a resolution, the more risk assets seem to respond favourably, purely in anticipation of a deal being done.
• The constantly adjusting timeline on a Greece deal almost feels like we are building to a crescendo of sorts, which perhaps explains why traders remain in good spirits.
• The fact that markets are exhibiting this kind of patience is a pleasant change to the fickle nature of the financial market psyche that we had become accustomed to in recent times.

12.39pm: The Australian dollar has slipped back below $US1.08 and is trading at $US1.0786, as investors await news on Greece’s debt resolution.

Nomura head of foreign exchange Kurt Magnus says the market is looking to Europe to guide its next movements.

‘‘The situation yesterday with the RBA’s decision was a shock to the market, and it’s seen the Australian dollar stall in a higher range,’’ he says. ‘‘Today, it’s quiet in anticipation of news out of Greece tonight.

‘‘Obviously, positive news will see the Australian dollar climb towards those July highs (of $US1.10) from last year. Negative news will see the Aussie test the bottom end of the range very rapidly.’’

12.31pm: The boardroom turmoil at Yahoo! continues, with the struggling internet company set to lose chairman Roy Bostock and three other directors.

The corporation - once a web powerhouse but now agonising over a range of options to revive flagging growth - says it appointed former Rovi Corp CEO and IBM veteran Alfred Amoroso and ex-eBay COO Maynard Webb as independent directors.

Yahoo!'s board has come under fire from investors impatient with the company's persistent inability to effect a turnaround, and frustrated with the apparent indecisiveness of stakeholders over how to handle its investments in Alibaba and other prized Asian assets.

12.27pm: Stockmarkets have opened higher around the region. Japan’s Nikkei has gained 0.5 per cent, hittting a fresh three-month high, buoyed by a better-than-expected profit outlook from Toyota. Korea's Kospi is up 0.4 per cent, Taiwan's Taiex has jumped 1 per cent and the Singapore Straits index is up 0.3 per cent.

12.23pm: And some more earnings, this time from US companies reporting after the close of Wall Street:

Walt Disney's quarterly revenue fell short of the Street's expectations after the movie studio put in a poor showing, as the largest US media corporation searched for new ways to grow its struggling ABC television unit.

Disney posted fiscal first-quarter revenue of $US10.8 billion, a 1 per cent gain from a year earlier. Analysts on average had expected revenue of $US11.2 billion. Profit grew 12 per cent as the consumer-dependent media networks and theme parks held strong in an uncertain economy.

Disney shares fell 1.8 per cent to $US40.28 in after-hours trading.

Meanwhile, Coca-Cola reported better-than-expected quarterly results and announced a new cost-savings program that it will use to boost its brands and mitigate higher commodity costs.

Coke's fourth-quarter net income was $US1.65 billion, or 72 cents per share, down from $US5.77 billion, or $2.46 per share, a year earlier, when the company recorded a gain related to the acquisition of its North American bottling operations.

12.15pm: BusinessDay's Matt O’Sullivan, meanwhile, is just reporting more signs of the high dollar's impact:

The online travel booking service Webjet has posted a 17 per cent rise in half-year profits as it continues to benefit from Australians travelling overseas in record numbers.

Shares in Webjet were unchanged $2.58 at midday today – just below a two-year high struck last week – after the Melbourne company reported an after-tax profit of $5.9 million for the six months to the end of December, compared with $5 million a year earlier.

Revenue rose 35 per cent to $29 million for the first half.

12.13pm: Some of the commentary around BHP Billiton today has focused on whether the Glencore/Xtsrata mega-merger will pose a threat. (BHP's Kloppers said it won't affect the miner's plans.)

Turns out that the $38b merger may not go through quite so smoothly, afterall: Xstrata deal with Glencore dealt major blow.

12.07pm: Banks must be harder than usual to pick for investors. On the one hand, local demand for loans from businesses and households remains weak - which probably means more job cuts for an over-banked economy.

But if global credit conditions improve, then banks' funding costs will fall, and so their profits will rise, whether or not they try to foist out-of-RBA-cycle rate rises on borrowers.

BusinessDay's Chris Zappone takes a look here: banks in precarious position on rates.

12.01pm: It's worth noting, though, that materials are up about 11.5 per cent in 2012 - outpacing energy stocks with a 9 per cent gain and financials 3.1 per cent. Consumer staples are off 1.3 per cent and health stocks 2.5 per cent. The overall market is up about 5.4 per cent, by way of context.

11.57am: Looks like stocks are back where they started the day. Materials are down 0.2 per cent and financials are up about the same - yin & yang, almost.

11.49am: The federal government, meanwhile, has filed its defence to big tobacco’s High Court challenge against Labor’s plain packaging laws.

Manufacturers British American Tobacco, Philip Morris, Imperial Tobacco and Japan Tobacco International argue the government’s move to force all cigarettes to be sold in drab olive-brown packs from December is unconstitutional.

The companies believe the laws, which passed parliament in late November, breach the Australian Constitution because they seek to acquire property - in the form of brand names - without providing compensation.

11.40am: Malcolm Maiden, meanwhile, has this to say about the BHP result:

Essentially the strategy sees BHP focusing exclusively on low cost, long-life top quality projects, and for the group to hedge the risk posed by market moves in any one commodity by maintaining a suite of mining and oil and gas assets.

11.29am: Quick recap on the morning. It's been dominated by BHP and its almost-$US10 billion profit. There's also Rio Tinto planning to spend $US3.4 billion more on iron ore.

11.17am: Qantas has grounded one of its flagship Airbus A380 aircraft for up to a week after engineers found dozens of cracks in its wings during detailed inspections following a flight hit by turbulence.

The latest ones were found during routine checks of the A380 - named Charles Kingsford Smith - after it hit severe turbulence above India on a flight from London to Singapore on January 7.

Investors appear to be unfazed. Its shares are 1.2 per cent higher, or 2 cents, to $1.64.

11.07am: A mixed performance by the big banks today:

• CBA is 0.26% lower to $50.38
• ANZ is 1.36% higher to $21.65
• NAB is 1.16% lower to $22.94
• Westpac is 0.05% lower to $20.91
• Macquarie Bank is 3.17% higher to $26.72

11am: Markets are basically flat an hour into the day's trade - both the ASXS200 and All Ords are about 0.1 per cent higher. RBS Morgans senior equities adviser Geoff Voller said it had been a quiet start to the local trading session.

‘‘There’s not a lot happening and not a lot of catalysts just yet,’’ he said. Mr Voller said tomorrow would be a busier day for the local share market with News Corp, Telstra and Rio Tinto reporting earnings results.

‘‘We’re keenly awaiting those numbers to see how they might affect our market,’’ he said. ‘‘So, people are really in waiting mode rather than action at the moment.’’

10.55am: To some of the companies lagging the market so far today:

• Downer EDI - down 3.2%
• Alumina - down 3.1%
• QBE - down 1.3%
• Toll - down 1.2%
• NAB - down 1.16%
• News Corp - down 0.9%
• BHP - down 0.87%

10.47am: Property developer Australand has suffered a 15 per cent drop in full-year net profit but believes it can improve earnings in 2012 despite difficult market conditions.

The residential and commercial developer on Wednesday said its net profit dropped to $140.6 million for the year to December 31, 2011, from $165.8 million in 2010. Revenue was also lower, by eight per cent, at $692.8 million. The company said earnings were hit by the hefty cost of revaluing seven development projects in Queensland, and a $24.2 million loss on interest rate derivatives.

Its shares are higher today - up 1.5 per cent, or 4 cents to $2.67.

10.43am: Rio Tinto has announced it will spend $US3.4 billion ($A3.16 billion) expanding its iron ore operations in Western Australia’s Pilbara region.

It is to spend $US2.2 billion on its fully owned Nammuldi iron ore mine, in the process boosting the project's capacity in the Pilbara to 283 million tonnes a year. A further $US1.2 billion, of which Rio Tinto's share is $US700 million, is to be spent to upgrade the capacity of the Cape Lambert port and rail infrastructure.

Its shares have edged lower today - down 0.6 per cent, or 49 cents, to $70.52.

10.39am: Gunns shares have skyrocketed following news that the timber company has found a backer. Its shares have added 64 per cent, or 8 cents, to 20.5 cents.

Earlier today, the woodchipper announced it will make up to $280 million with the issue of new shares to New Zealand billionaire Richard Chandler.

10.35am: The spotlight goes back onto jobs today with an announcement from Alcoa that it is reviewing operations at its Geelong aluminium smelter.

About 600 workers face an uncertain future after the company said metal prices, rising costs and the soaring dollar had forced the review. While the company would try to turn the plant around, Alcoa Australia managing director Alan Cransberg acknowledged that one outcome was that the smelter ‘‘may be curtailed’’.

‘‘I know this is unsettling news that creates uncertainty for our employees and the many people that depend on the smelter for their livelihood,’’ he said.

10.28am: Macquarie is back in the winners' circle today. Its shares have added 3.2 per cent after falling yesterday on a disappointing profit outlook. Other good performers on the ASX200 so far today include:

• Ramelius Resources - up 3.18%
• Perseus Mining - up 3.16%
• Bradken - up 2.8%
• Campbell Bros - up 2.74%
• Qube Logistics - up 2.47%

10.23am: Markets now showing a 0.4 per cent gain. Meanwhile, the dollar has pushed back above $US1.08. Shortly after 9.30am, the Aussie was buying $US1.0804 its highest level since the beginning of August.

‘‘After the RBA decision, the interest rate market got caught completely wrong-footed, as well as probably the stock market, so we saw a big jump up in the Australian dollar,’’ HiFX senior trader Stuart Ive said.

Some economists say the local currency could climb to a new record against the US dollar, citing any positive developments on the eurozone debt crisis as a further boost.

10.17am: Most sub indices are trading in positive territory. Info tech and gold are both 1 per cent higher. Energy and financials are 0.7 per cent higher. Consumer staples and telecomms are lagging the market, however. Both are 0.3 per cent higher.

10.12am: In early trade, the All Ordinaries index is 14.9 points higher, or 0.3 per cent, to 4359.8, while the benchmark S&P/ASX200 is 14.1 points higher, or 0.3 per cent, to 4288.3.

10.07am: Shares edge higher early - up 0.1 per cent.

10.02am: BHP shares have slipped modestly in early trade following this morning's first-half profit release. They are down as much as 42 cents, or 1.1 per cent, to $37.38.

9.57am: Gloves and condoms maker Ansell says it increased its first-half profit by 1.1 per cent as it maintains its guidance and expects to recover lost ground in the second half.

Ansell said net profit was $64.9 million in the six months to December 31, 2011, up from $64.2 million in the previous corresponding period.But revenue was down 3.9 per cent at $597.7 million, from $621.8 million previously.

The Melbourne-based company increased its interim, unfranked, dividend by one cent to 15 cents.

9.55am: Woodchipper Gunns will make up to $280 million with the issue of new shares to New Zealand billionaire Richard Chandler. Gunns said it had agreed commercial terms with Richard Chandler Capital Corporation for a rights issue of 1.3 new shares for every one share.

The proposed terms of the deal are non-binding and subject to approvals from the Australian Securities Exchange and Gunns shareholders. The proceeds of the capital raising venture will be used to reduce the company’s debt, Gunns said.

9.51am: A couple of follow-ups to yesterday's rates decision:

• Malcolm Maiden writes on the decision now facing the banks - move rates higher without the cover of an RBA cut, or hold fire

• Jessica Irvine looks at how so many economists got their predictions wrong

9.43am: Heading into the trading day, here's a list of analyst rating changes to consider:

• Warehouse Group cut to 'sell' at Deutsche Bank
• National Australia Bank cut to 'hold' at Deutsche Bank
• Henderson Group upgraded to 'overweight' at Morgan Stanley
• Caltex Australia raised to 'neutral' at Goldman Sachs
• Centro Retail downgraded to 'neutral' at RBS
• Nexus Energy raised to 'buy' at RBS

9.39am: BHP chief Marius Kloppers described the result as "robust" and a ''strong and predictable performance''.

Mr Kloppers said BHP's strategy would not change in the wake of the proposed tie-up between Glencore and Xstrata. BHP was distinct from the proposed new entity because it was the only company to invest solely in ''tier-one, long-life, low-cost assets.''

9.36am: First things first. BHP has today reported a bumper profit to December 31. BHP Billiton posted first half profit of $US9.94 billion ($9.2 billion) but it fell just short of market expectations.

The result is one of the biggest in Australian corporate history, but fell short of the record $US10.52 billion set by BHP last year and the expected $US10 billion level analysts had predicted.

9.32am: Before we get to the BHP profit result, here are today's key links. Check the need2know and business press digest for a complete wrap of the morning's news:

• The SPI was 6 points higher at 4253
  
• The $A was trading at $US1.078
  
• In the US, the S&P500 added 0.2% to 1347.05
  
• In Europe, the FTSE100 lost 0.03% to 5890.26
  
• Gold rise 1.6% to $US1746.09 an ounce
  
• WTI crude oil added $US1.92 to $US98.83 a barrel
  
• RJ/CRB commodities index rose 0.25% to 315

9.30am: Good morning folks. Welcome to the Markets Live blog for Wednesday.

This blog is not intended as investment advice
 

BusinessDay with agencies