Australian shares set for positive start

Outlook: Aus shares set for positive start February 01, 2011 09:18 AM

 

The Australian share market looks set to open higher, following a positive session on Wall St. US stocks lifted as investors reacted to strong earnings from Exxon Mobil and rising commodity prices, while still keeping an eye on the political unrest in Egypt. The price of oil advanced, with Brent oil rising above $US101 a barrel for the first time since 2008.

US economic news: The Commerce Department reported personal income increased 0.4 per cent in December, coming in just under economists’ expectations. While personal spending increased 0.7 per cent in the same month, beating earlier forecasts.

On Monday, the Dow Jones Industrial Average, closed 68 points higher to 11,892, S&P500 firmed 10 points to close 1,286 and the NASDAQ added 13 points to close 2,700.

European stocks were mixed: London’s FTSE down 18 points, Paris up 3 and Frankfurt down 25.

To Asian markets, stocks were also mixed: Hong Kong’s Hang Seng was down 170 points, Tokyo was down 122 points and China’s Shanghai Composite rose 38 points.

The Australian share market finished lower on Monday. The S&P/ASX 200 Index dropped 21 points to close at 4,754 and on the futures market the SPI is up 12 points.

Turning to currencies and the Australian Dollar at 8:45AM was buying 99.73 US cents, 62.27 Pence Sterling, 81.89 Yen and 72.85 Euro cents.

In economic news: The Reserve Bank of Australia today meets for its first board meeting of this year and interest rate decision, with economists widely expecting the rate to be kept unchanged at 4.75 per cent. The RBA is also due to release its index of commodity prices for January. Also due today, the Australian Industry Group/Pricewaterhouse performance of manufacturing index for January, the Australian Bureau of Statistics house price indexes: eight capital cities for the December quarter, and National Australia Bank’s monthly business survey for December.

Company news: On Monday shares in Crane Group Ltd (ASX:CRG) rose 3.97 per cent to close at $9.96. Crane Group has recommended its shareholders accept Fletcher Building Group Ltd’s (ASX:FBU) sweetened takeover bid for the company. The endorsement comes after Fletcher boosted its offer from $9.35 per share to $10.07 per share, valuing Crane at over $800 million. The revised $10.07 bid includes $3.50 in cash, one Fletcher share and a fully franked 50 cent special dividend. For the year ended 30 June 2010, Crane reported a net profit of $31.9 million.

On Monday shares in Westpac Banking Corporation (ASX:WBC) added 0.35 per cent to close at $22.99. The Australian Financial Review says Westpac will this year need to secure around $40 billion in funding. The report comes following Westpac’s CEO Gail Kelly’s comments last week, telling the Senate banking inquiry that she predicts funding costs will peak in around 18 months. According to the AFR, Australia’s big four banks will need to find around $135 billion in wholesale funding this year because of their reliance on international financing. Westpac Banking posted a net profit of $6.4 billion in the year to 30 September 2010.

Ex-dividends: Katana Capital is going ex-dividend today with a $0.01 cent fully franked dividend. Coming up on Friday is Australian Foundation Investment Company with an $0.08 cent fully franked dividend.

To commodities: Gold is down $10.70 to $US1,333 an ounce for the February contract on Comex, silver is up $0.85 to $28.17 for March and copper is up $0.11 to $4.46 a pound. Oil is up $4.32 at $92.19 a barrel for March light crude in New York.

 

Midday: Aus shares stronger as miners rally December 07, 2010 12:15 PM

The Australian share market is trading stronger at midday, lead by the miners as stronger base and precious metal prices lifted resource stocks. Gold miners also rallied after gold prices rose in overnight offshore trade, hitting its highest point since mid-November. Copper has also risen to a three-week high.

The S&P/ASX200 index is up 23 points to 4,712, while on the futures market the SPI is up 21 points.

Economics news: The Performance of Construction Index released by Australia Industry Group and the Housing Industry Association shows Australia’s construction sector has contracted for a sixth month in November, with apartment builders reporting the worst conditions in 16 months. The overall construction index fell by 1.8 points in November. Apartment building and house building both took a dive. The survey found firms complaining about difficult market conditions, intense competition and decreasing work from the government’s school building project. Residential builders cited the impact of higher interest rates and weak demand from first home buyers.

Telstra Corporation Ltd’s (ASX:TLS) wholesale division is set to compete with NBN Co and various other wholesalers in the voice and internet services resale market. Telstra Wholesale’s group managing director Paul Geason says the company can keep its wholesale customers after transferring them to fibre if it provides services that NBN can’t such as billing, data hosting, content distribution and television. Shares in Telstra are down 0.36 per cent at $2.79.

Newcrest Mining Ltd (ASX:NCM) says it expects to boost gold output to 3.75 million ounces in the 2014 fiscal year from 2.74 million ounces in 2010. Earlier this year, Newcrest acquired rival Lihir Gold, which mainly operated from Lihir Island in Papua New Guinea. Shares in Newcrest are up 1.22 per cent at $41.59.

Turning to market indices, and the best performing sector is Materials with the index up 127 points to 13,922. Shares in Synergy Metals have advanced 16.67 per cent to $0.007. Shares in Strategic Minerals and Copper Range are also higher. The worst performing sector at midday is Healthcare with the index down 58 points to 8,773. Shares in Cordlife are down 16.9 per cent to $0.295. Shares in Stirling Products and LBT Innovations have also dropped at midday.

To New Zealand: The NZSX50 is down 4 points. Taking a look at the top 4 stocks by turnover, Telecom Corporation of New Zealand is at the top of the list with stock down 1.38 per cent at $2.15; followed by Fletcher Building Group, Sky Network and Contact Energy.

To gold and the dollar: Gold is trading at $US1,421 an ounce and the Aussie dollar is buying 98.84 US cents.

Weekly finance forecast

The RBA’s meeting this Tuesday is unlikely to produce another rate hike, we got that when the commercial banks hiked following the November 2 meeting. In terms of market pricing, no economists expect the RBA to hike and futures have no chance of hike priced in and if anything, a very modest chance of a cut – don’t get excited about that though.

There is a lot of talk about the prospect of a more dovish RBA statement following the decision and while that’s always a possibility I’m not sure that the RBA or indeed the RBA board will be feeling that dovish.

You have to acknowledge, and I do, that it has been a good week for the bears (on the economy at least). At face value the retail figures and the soft GDP figures suggest the economy is slowing sharply and certainly some commentators believe just this. Nevertheless, and as I briefly discussed on the day, the headline GDP figure gives a misleading signal as the weakness was driven by base effects, statistical noise and producers underestimating growth (running down inventories).

Consequently I think it’s wrong to conclude from these figures that the economy is slowing sharply. Domestic demand growth (what consumers, business and government actually spend) is still robust, rising 0.6%q/q after 4 quarters of growth averaging 1% and annually, growth is an above trend 4.4%.

I mean it doesn’t make a lot of sense to conclude the Australian economy is slowing. Interest rates are only at average levels. They are not restrictive and I don’t think it’s accurate to suggest that the nation is straining under the weight of restrictive monetary policy. Moreover, jobs growth is very strong and the unemployment rate is very low. Note that we get another update on the labour market this Thursday (1130) and the median market expectation is that 20K (me at 15k) jobs were created. The unemployment rate is forecast to dip to 5.3%.

This, by the by, is one of the reasons I don’t think we can be confident of the signal the monthly retail numbers are giving – you don’t usually have a sluggish retailing sector when jobs growth is so strong. Don’t forget we have been here before, numerous times. Mid-year for instance, things were looking dire in the retail space, along comes an ABS revision and all of a sudden things weren’t so dire.

The opposite occurred this time round. Monthly retail sales were looking solid, along comes one weak month and some revisions, all of a sudden things look soft. My point is, you’re not going to get an accurate picture of the retailing environment when they are subject to such swings (something that it evident in the monthly retail components as well, swings have been huge). Nor are you going to get an accurate picture of the retailing environment from the retailing association. So think big picture, look at the whole canvass and you’ll be able to make a more precise assessment of where the Australian economy sits – and of course profit from any mispricing.

For instance, IBs look expensive for mine. Not even one rate hike is priced into the curve at this point (46% to June) and while I reckon future rate hikes will occur less frequently, I don’t quite think they’ll be that infrequent. I still think there will be 2 rate hikes in the first half, at this stage one each in Q1 and Q2, based largely on global growth prospects – which is why I think 10yrs look expensive as well.

Risk appetite is coming back, the global economy is much, much stronger in the 2H10 than had been projected and there is no sign of this material slowing that has been continually touted. 2011 will no doubt be more of the same – except much stronger. There is an extraordinary amount of policy stimulus globally and that doesn’t look like its going to change any time soon. Indeed the Bernank is apparently about to argue on 60 minutes (11am today Oz time) that he won’t rule out further quantitative easing. US data outside of that is reasonably light and includes initial jobless claims (Thursday), trade data and the Michigan consumer confidence survey (both Friday). The US government then plans to sell $66bn in coupons this week and monetise (this week alone) up to 1/3 of it by buying $15-$22bn worth of treasuries off itself and printing the money to do it.

In Europe , watch out for German factory orders (Tuesday), and then German trade data and industrial production on Wednesday. The UK has industrial production on Tuesday and the BoE meeting Thursday (no changes expected). Otherwise watch out for Chinese trade data on Friday and central bank meeting in Canada , NZ (Thursday morning at 7am) and South Korea (no changes expected).

Don’t forget ICAP’s charity day this Wednesday – dig deep, as all profits earned go toward helping those in need and as we know, good things happen to charitable people. So let’s be charitable!

Hope you have a great week…

Outlook: Aus shares may open lower – andre di cioccio – October 26, 2010 09:19 AM

The futures are pointing to a lower start for Aussie shares this morning, despite Wall St rallying to six months highs on stronger than expected housing sales data.

In US economic news: The National Association of Realtors reported existing home sales surged 10 per cent in September, to an annual rate of 4.53 million.

On Monday, the Dow Jones Industrial Average closed 31 points higher at 11,164. The S&P 500 Index is up 3 at 1,186 and the NASDAQ is up 11 at 2,491.

European stocks were higher: London’s FTSE up 11 points, Paris is up 1 and Frankfurt up 33.

Asian markets were mixed: Hong Kong’s Hang Seng up 110, Tokyo’s Nikkei was down 26 and China up 76.

The Australian share market finished higher on Monday. The S&P/ASX 200 Index closed 62 points higher to 4,710 and on the futures market the SPI200 is down 18 points.

Turning to currencies and the Aussie Dollar at 8:35AM was buying 99.15 US cents, 63.01 Pence Sterling, 80.12 Yen and 70.99 Euro cents.

In economic news: The Australian Bureau of Statistics is expected to release its annual 2009-2010 report. Also due out, National Australia Bank’s business survey for the September quarter.

In company news: Shares in ANZ Banking Group (ASX:ANZ) closed 2.09% up at $23.90 on Monday. ANZ has received the final green light to establish a foreign bank in India in the first half of next year. The Reserve Bank of India has granted ANZ a foreign banking license which will see ANZ launch its first Indian branch in Mumbai. ANZ says the branch will have an initial focus on corporate and institutional banking that will broaden to include services for affluent personal banking clients over time. Adding, that India is a strategic market in ANZ’s plan to become a super regional bank in the Asia Pacific region. In the six months to 31 March this year, ANZ Banking Group booked a $1.93 billion net profit.

Shares in Wotif.com Holdings Ltd (ASX:WTF) closed 1.08% down at $4.60 on Monday. Online travel booking service provider Wotif.com Holdings says earnings are expected to be steady for the last half of this year, but that growth should improve around March next year. Managing director Robbie Cooke anticipates profit for the second half of 2010 will be around $25 million, slightly the below the $25.4 million recorded in the prior half, and even lower than the $27.6 million profit posted in the same half of 2009. Mr Cooke has cautioned that the short term challenge for business will be outperforming the first-half result achieved in the 2010 financial year, in a period in which Wotif.com benefited from the booking window extension and the out-of-trend spike in domestic sales experienced last calendar year. Wotif.com Holdings reported a profit of $52.95 million for the year to 30 June 2010.

To ex-dividends: Three companies are going ex-dividend today, they are GPT Group with a 4.1 cent unfranked dividend, Mitchell Communication Group with a 5 cent fully franked dividend and SteriHealth with a 7 cent fully franked dividend. Coming up later this week, Adtrans Group, Australian Masters Corporate Bond Fund No1 and Australian Masters Corporate Bond Fund No2.

To commodities: and the price of gold is up US$13.80 to US $1338 an ounce for the December contract on Comex, silver is up US$0.43 to $23.54 and copper is up $0.07 at $3.86 a pound. The price of oil is up $0.83 to US$82.52 a barrel for December light crude in New York.

Daily Australian Finance Report – andre di cioccio – News 12 October 2010

There was little data or news out last night. US bond markets were closed for Columbus day, and action was reasonably muted in the FX and equity space.  We’re all still waiting for the Fed, the FOMC minutes tomorrow morning and the run of Fed speak -  and that’s not to forget the strong dataflow towards week’s end. Remember this dataflow, and ensuing numbers out over the next few weeks are critical.  We are at an important juncture and it doesn’t pay to downplay it. Uncertainty is high and there are a variety of views out there. After this run of data we’ll be a in a much better position to assess some of the downside risks being touted – to determine who is likely to be right. We’ll pretty much have Q3 sorted and we’ll even get a glimpse into Q4. We’ll have a better idea as to whether the global economy will indeed deteriorate as many expect, accelerate or just plod along.

For the moment, markets are still expecting the Fed to print more money and that’s the best bet given their rhetoric. Nevertheless, USD did bounce a bit last night as traders took some profit. At the time of writing, Euro was down almost a big figure to 1.3875, Sterling was off 64pips to 1.5875, AUD was broadly unchanged at 0.9849 and Yen rose to 82.18 from 82.03. While we may have seen a bit of a bounce last night, emerging market concerns about USD weakness clearly remain high. Brazil has already taken measures to impose a tax on foreign bond purchases and Thailand announced yesterday that it is considering a similar action. Hot money flows are already a problem for emerging markets – as, by the by, are rising food prices caused by the falling dollar.

The reality is that if the Fed insists on debasing its currency, we’ll be seeing a lot more of this type of action.  So perhaps the PBoC’s decision to hike the reserve requirement by 0.5% to 17.5% (1st move since May) was driven, in part, by these hot money flows. Whatever the case, it is intended as a temporary measure (about 2 months) for the 6 largest banks to help rein in excess liquidity.  While we’re on China and the ‘currency wars’ etc I heard the Governor of the BoE say the most sensible thing I’ve heard him say in a while. He suggested that China can’t rebalance its economy in a couple of years. As far as I can tell this is the sticking point. China is actually revaluing the Yuan and while I haven’t seen the US publically declare how much of an appreciation they want, I’ve got no doubt, and history suggests, they want it to be radical. The question for the global economy is whether this is a reasonable expectation.

Moving on, and despite USD bouncing, commodities had a mixed session, with crude down 0.8% to $82.00, copper was up smalls and gold was basically unchanged at $1351.  Then to equities; they closed basically flat in the US after a decent session in Europe (+0.3 to +0.4%).  The S&P500 was down 0.01% (1165), the Dow was up 0.02% (11008), while the Nasdaq finished up 0.02% as well (2402). By sector there was no major departure from zero. Telco’s and energy were up smalls and industrials and basic materials were down smalls. For Oz, the SPI was up 0.01% (4718).

As mentioned US bond markets were closed and there wasn’t a lot of action elsewhere. Aussie futures ended unchanged (3s at 95.09 and 10s at 94.96) on a 3 to 4 tick range.

So that’s about it. No real data to speak of. To the day ahead and at 1130 we get NAB’s September business survey. No one formally forecasts this series, but I would be expecting a bounce in confidence given the pick up in the news flow and share market rally. Tonight, watch out for UK CPI, the FOMC minutes and a speech from the Fed’s resident hawk – Hoenig.

Australian daily share report – reposted by andre di cioccio

Aussie shares are likely to open lower today after US stocks dropped following disappointing data on manufacturing growth, fuelling concerns of an economic slowdown.

In US economic news: The Commerce Department revealed factory orders declined 0.5 per cent in August, more than expected. The National Association of Realtors showed pending home sales increased 4.3 per cent in August.

On Monday, the Dow Jones Industrial Average closed 78 points down at 10,751. The S&P 500 Index is down 9 at 1,137 and the NASDAQ is down 26 at 2,345.

European stocks were down: London’s FTSE down 37 points, Paris is down 42 and Frankfurt down 77.

Asian markets were mixed: Hong Kong Hang Seng up 260, Tokyo’s Nikkei was down 23 and China was closed.

The Australian share market finished higher on Monday. The S&P/ASX 200 Index closed 46 higher to 4,625 and on the futures market the SPI200 is down 24 points.

Turning to currencies and the Aussie Dollar at 8:30AM was buying 96.80 US cents, 61.17 Pence Sterling, 80.71 Yen and 70.76 Euro cents.

In economic news: The Reserve Bank of Australia is tipped to raise interest rates today when it meets for its monthly meeting this afternoon. Also expected out today, The Australian Bureau of Statistics data on international trade in goods and services and retail trade for August. The ANZ Bank job advertisements series for September and The Australian Industry Group/Commonwealth Bank performance of services index for September.

In company news: Shares in BHP Billiton Ltd (ASX:BHP) closed 1.37% up at $40 on Monday. BHP has received a promising sign that its $39 billion hostile takeover bid for Canada’s PotashCorp may go ahead. According to Reuters, an independent report from the Conference Board of Canada has cautioned the Canadian Province where PotashCorp is based not to fight the global miner’s bid. In September BHP received antitrust clearance from regulators in the US to progress with the bid and is still persisting with its takeover of the fertiliser giant. BHP booked a profit of $15.26 billion in the 2010 financial year.

Shares in National Australian Bank (ASX:NAB) closed 1.8% up at $25.45 on Monday. NAB appears to be reaping the rewards of its turnaround strategy, The Australian reporting that data from the Australian Prudential Regulation Authority shows the bank is increasing its mortgage market share through attracting its rival’s customers. According to the report, NAB has the cheapest standard variable rate of 7.24 per cent compared to the country’s other major banks and has lifted its home lending portfolio every month since the last interest rate rise in May. In the six months to 31 March this year, National Australia Bank posted a $2.1 billion profit.

To ex-dividends: Four companies are going ex-dividend today, Australian Masters Corporate Bond Fund No3 with a dividend of $3.26, David Jones with an 18 cent dividend, Greencross with a 2.5 cent dividend and Premier Investments with a 28 cent dividend, all fully franked.

To commodities: and the price of gold is down US$1.00 to US $1316 an ounce for the December contract on Comex, silver is down US$0.02 to $22.04 and copper is down $0.03 at $3.66 a pound. The price of oil is down $0.11 to US$81.47 a barrel for November light crude in New York.