Outlook: Aus shares set for stronger start November 19, 2010 09:15 AM

Outlook: Aus shares set for stronger start November 19, 2010 09:15 AM

The Australian share market looks set for a stronger start to the day. US stocks climbed over 1 per cent yesterday after an encouraging debut by General Motors, and fears over Ireland’s debt crisis easing on news the Irish government is expected to accept a bailout loan.

In US economic news: The Labor Department showed the number of people filing for first-time unemployment benefits rose by 2,000 to 439,000 in the last week, below the figure that was expected. While the number of Americans who have continuing claims, receiving benefits for more than one week, fell to 4.3 million in the week gone, representing the smallest figure in almost two years. The positive economic data continued with a read from The Philadelphia Federal Reserve, its index on manufacturing grew to 22.5, up from 1 in October, coming in much higher than expected.

On Thursday, the Dow Jones Industrial Average closed 174 points higher at 11,181. The S&P500 Index up 18 points at 1,197 and the NASDAQ closed 38 points higher at 2,514.

European stocks were higher: London’s FTSE up 76 points, Paris is up 76 and Frankfurt up 132.

To Asian markets, stocks closed stronger: Hong Kong’s Hang Seng was up 423 points, Tokyo’s Nikkei was up 202 points and China’s Shanghai Composite up 27.

The Australian share market finished higher on Thursday. The S&P/ASX 200 Index gained 16 points to close at 4,640 and on the futures market the SPI200 is up 30 points.

Turning to currencies and the Aussie Dollar at 8:35AM was buying just over 99 US cents, 61.73 Pence Sterling, 82.69 Yen and 72.58 Euro cents.

In local economic news: Due out today The Melbourne Institute bulletin of economic trends.

Company news: On Thursday shares in Westpac Banking Corporation’s (ASX:WBC) closed down 0.59 per cent at $21.80. Westpac’s CEO Gail Kelly has refuted claims that she does not have a strategy for the bank, telling The Australian she will focus on relationships with customers and particular segments, with a multi-brand approach. Mrs Kelly’s comments come amid criticism for lacking a bold strategy to tackle the pressures of rising funding costs. However the paper reports Mrs Kelly has rejected these suggestions and says, Westpac is engaged in a transformation, from a product-centric to a customer-centric organisation. Westpac earned a $6.4 billion net profit in fiscal 2010.

Yesterday shares in BHP Billiton Ltd (ASX:BHP) ended 0.76 per cent higher at $43.80. Global miner BHP has launched legal action against iron ore junior miner FerrAus Ltd (ASX:FRS), in a bid to protect its use of its main line on the Pilbara rail system in Western Australia. Just yesterday BHP and Atlas Iron Ltd (ASX:AGO) announced they are negotiating a deal to allow Atlas to access another one of BHP’s routes, the Goldsworthy rail line in the Pilbara. BHP’s legal action against FerrAus is aimed at preventing the company to appoint an independent expert to determine the terms of a haulage contract between the two miners. BHP Billiton recorded a net profit of $15.26 billion in the 2010 financial year.

To ex-dividends: No companies are going ex-dividend today, but coming on Monday are Count Financial, Novarise, Redflex Holdings, Supply Network, Solco and SP AusNet.

To commodities: The price of gold is up $US16.10 to $US1353 an ounce for the December contract on Comex, silver is up $US1.32 to $26.83 and copper is up $0.10 at $3.83 a pound. The price of oil is up $1.41 to $US81.85 a barrel for December light crude in New York.

Market Wrap: Australian share market buoyed by miners

Market Wrap: Australian share market buoyed by miners November 18, 2010 05:25 PM

The Australian share market has inched up into positive territory after opening flat this morning. The banks offset mining gains as the share market edged up slightly. The Big Four all closed in the red today while miners BHP Billiton Ltd (ASX:BHP), Rio Tinto Ltd (ASX:RIO), Newcrest Mining Ltd (ASX:NCM) and Woodside Petroleum Ltd (ASX:WPL) made gains.

The S&P/ASX 200 Index closed 16 points higher to finish at 4,640. On the futures market, the SPI200 up 21 points.

The Australian Bureau of Stastics has reported that the average weekly ordinary time earnings for full-time adult employees has risen by 0.4 per cent in the three months to August. The figure represents a 4.5 per cent increase compared to the previous year.

National Australia Bank Ltd (ASX:NAB) is facing a shareholder class action as hundreds of institutional and retail investors are taking the bank to court for losses related to the subprime mortgage crisis. 250 shareholders are claiming to have lost around $450 million because NAB did not disclose its exposure to subprime securities in 2007 and 2008. In 2006, NAB bought over of $1 billion worth of debt-related bonds called collateralised debt obligations. The value of these investments dramatically plunged following the subprime crisis. Shares in NAB closed 0.25 per cent lower at $24.37.

Australia’s largest supermarket chain Woolworths Ltd (ASX:WOW) says it is looking out for big acquisitions and has reaffirmed its forecast for full year profit growth of between 8 and 11 per cent. The company’s chairman James Strong told shareholders at the group’s annual meeting today that the firm remains open and alert to a range of major acquisitions. Last month, the retailer posted first quarter sales growth of 2 per cent, amidst tight consumer spending and an uncertain economic environment. Shares in Woolworths closed 0.87 per cent higher at $27.74.

Toll road operator Intoll Group Ltd (ASX:ITO) says traffic and revenue has increased in the first quarter of the 2011 financial year on both its assets, one in Canada and the Westlink M7 based in Sydney.

Qantas Airways Ltd (ASX:QAN) chief executive Alan Joyce says up to 14 Rolls Royce engines on the airlines A380s will need to be inspected and potentially replaced.

AMP Ltd’s (ASX:AMP) $14 billion bid for rival fund manager AXA Asia Pacific (ASX:AXA) has secured the unanimous backing of AXA’s board, after one final dissenting director gave the deal his support.

David Jones Ltd (ASX:DJS) has recorded $466 million of sales in the first quarter of its 2011 financial year, a 1.2 per cent rise compared to the same period last year.

In the best and worst market performers: The best performing sector was Healthcare which closed 97 points higher to 8,479. The worst performing sector was Utilities with the index falling 32 points to 4,492. The best performing stock in the S&P/ ASX200 was Sundance Resources as shares were 6.78 per cent higher to 31.50. Shares in Panoramic and St Barbara also closed higher. The worst performing stock was Infigen Energy down 11.72 per cent to $0.64. Shares in Ausenco and Platinum Australia also closed in the red.

In commodities, gold is trading at $US1,350 an ounce. Light crude is up $0.90 to $81.34.

Ban bank takeovers, says AFG

The Big Four banks should be prevented from taking over any more of their second-tier rivals, according to the head of Australia’s largest independent aggregator.

AFG’s managing director Brett McKeon has called on the government to implement a three-point plan to rapidly restore competition to the mortgage market. Chief amonst the three proposals is a call for a ban on further market consolidation by the Big Four banks.

“The takeover of Bankwest by CBA and St George by Westpac have had seriously damaging consequences on lender competition,” said McKeon. “No further consolidation should be allowed by the Big Four, to allow the second tier banks, perhaps the likes of Bendigo & Adelaide or AMP, the opportunity to organically grow and become a natural competitor, or for two to join together – although the former option is preferable.”

McKeon also called for the government to meet with smaller lenders to discuss future policy initiatives that will stimulate non-major market share, and to draft policies to create a more level playing field in providing access to funding for smaller lenders. One such policy could be revising the terms on which government guarantees on secutritisation are calculated.

“Rather than basing government guarantees on an institution’s credit rating – which gives the upper hand to the majors – they should be based on the quality of the debt within the securitisation.” he commented. “This would still leave smaller lenders at a slight disadvantage, but would lessen the gap and promote better competition.”

McKeon admitted that he had “no problem with the majors doing what’s right for their shareholders”, instead arguing that the government had made mistakes that had allowed a non-competitive environment to prosper.

“The government has a role in promoting competition, and the current measures being bandied about – such as potentially banning exit fees – will just make the situation worse. It needs to engage in a more robust dialogue with smaller lenders and support them to promote effective competition.

One of the criticisms of this government in its first term is that it only superficially engaged with smaller firms – whether in finance, retail or mining,” added McKeon. “It has a chance to improve upon that in its second term, to step back from big business and support smaller companies. After all, it’s from small and medium-sized enterprises that the tier one businesses of the future will come.”