BusinessNow: Live coverage of financial markets and companies, with analysis and opinion

The banks and Telstra pulled the market higher, while mining services firms took a beating.

Stocks are set to rebound sharply from yesterday’s loss.

• Scentre result ‘credit negative’
• Woodside deal in doubt
• Blue-chip bounceback
• Time to sell Fortescue?
• Banco Santander heads for the exit
• Telcos, banks push ASX higher
• Oil Search profit plunges
• Earnings season turns sour

Welcome to the BusinessNow blog for Tuesday, August 23. Mining services firms are getting smashed, Oil Search is the latest victim of the oil price plunge, and Banco Santander is leaving Australia.

7.45pm:Fortescue scores rating upgrade

Ratings agency Moody’s has upgraded the credit rating of Andrew Forrest’s Fortescue Metals’ in the wake of its record dividend payout and rise in full-year profit announced this week. Read more.

6.58pm:ACCC adds to Utah Point concerns

The Australian Competition and Consumer Commission has flagged its concerns about the Western Australian government’s potential sale of the Utah Point export berth, with the watchdog calling for regulation of fees at the port under any future sale, writes Paul Garvey.

In a letter from ACCC chairman Rod Sims to the Parliamentary Committee studying the proposed sale of Utah Point – which is used by smaller miners in the Pilbara – the competition tsar stressed that pricing should be included as part of an “effective regulatory regime”. Read more.

6.25pm:Cabcharge flags impairments

The taxi payments services provider has flagged impairment charges of $27.7 million in fiscal 2016, reflecting regulatory changes as state governments deregulate their market.

The charges will be taken across Cabcharge’s national portfolio of licence plates, although Cabcharge owns fewer than 3 per cent of licence plates in the country.

The announcement comes as Victoria announces plans to legalise Uber.

6.19pm:Paris takes $1.1bn tourism slug

Paris has labelled the slump which followed its Islamist attacks, floods and strikes an “industrial disaster”. Read more.

5.38pm: The Great Australian Transport Trap

Some capital-city Australians are forking out 17pc of household income on transportation. It shouldn’t be this way, says Chris Kohler | WATCH THE VIDEO

5.30pm:Ainsworth profit slides on forex impact

Pokies group Ainsworth Game Technology has reported a slide in profit for the full year, as foreign exchange movements and weakness in the domestic market weighed, Daniel Palmer writes.

In an after-market statement to investors, Ainsworth said its earnings slid 21 per cent to $55.7 million for the 12 months to June 30. Read more.

4.48pm:Why health costs will keep rising

Sarah-Jane Tasker

Healthcare costs are lifting well above inflation, says Healthscope’s Robert Cooke.

“Given the ageing population, the technology, the demand for services, we will be paying more as a country. It is a question of who is paying,” he said.

Mr Cooke said there were inefficiencies in the system that needed to be addressed but he said the private healthcare system was the solution, not the problem. Read more.

4.30pm:Blue chips push market higher

The Australian sharemarket has enjoyed its best day in two weeks as blue chip stocks in the telecommunications and banking sectors drew favour.

At the closing bell, the benchmark S&P/ASX 200 index jumped 38.7 points, or 0.7 per cent, to 5,553.8, while the broader All Ordinaries index advanced 34.8 points, or 0.62 per cent, to 5,647.1.

Read more.

4.19pm:Does the Fed have an ace in the hole?

For observers of America’s central bank, the lesson of 2016 would seem to be that Federal Reserve officials will always find a reason to do nothing.

Market-watchers are awaiting any hint from Janet Yellen that the Fed will soon raise rates. (AP Photo/Manuel Balce Ceneta, File)

After hawkish comments last week from influential Fed members Stanley Fischer and William Dudley, Fed officials head to their annual symposium in Jackson Hole, Wyoming, on Thursday. We now await the appearance of Janet Yellen, the chairwoman, to see whether she adds credence to what economists at the Royal Bank of Canada describe as the latest “Fed bluster”, which hints at action at last and an interest rate rise sooner rather than later.

For what it’s worth, markets have put the chances of an interest rate rise before the end of the year at just over 50 per cent.
The Times
Read more

4.05pm:Scentre result ‘credit negative’: Moody’s

Frank Lowy’s Scentre Group has drawn concern from ratings agency Moody’s despite booking a solid increase in interim profit, writes Daniel Palmer.

Scentre (SCG) today logged a profit of $1.15bn for the six months through June, an increase of 6.6 per cent year on year.

The result was not well-received by Moody’s however, which tagged it as a “credit negative” result despite retaining its A1 rating on the stock.

At 3.55pm (AEST), Scentre shares traded down 0.1 per cent at $5.065, against a broader market rise of 0.6 per cent.
Read more

3.55pm:Today’s movers and losers

Earnings season is still throwing some spicy movement through the ASX – here are a few big movers worth mentioning:

APN Outdoor is up 1.9 per cent after nosediving 35 per cent yesterday following a nasty earnings guidance downgrade. Earlier this morning the stock was as much as 7 per cent higher than yesterday’s finish but it has since given back almost all its gains.

Bellamy’s Australia has jumped around 11 per cent in two days as analysts continue to back the powdered milk producer despite a roaring few months.

Charter Hall is up 3.9 per cent as investors pat the company on the back for a solid earnings result.

On the negative side of things, Monadelphous is still taking a hammering from investors – down 17.3 per cent after unveiling a miss to earnings and offering no guidance.

Aconex is up 0.9 per cent after reporting an earnings miss, but was as much as 12.5 per cent weaker this morning.

3.40pm:Investors sitting on their hands

With the Australian corporate earnings season about halfway through, the results so far have been reasonable though unspectacular, leaving the local bourse highly dependent on record low interest rates and risk-tolerant global markets to sustain its high price-to-earnings valuation.

After surging 11 per cent in the four weeks following the brief sell-off triggered by the Brexit vote, the S&P/ASX 200 has tracked sideways for three weeks as investors digest earnings reports, while awaiting decisive movement in global markets.

Read more of David Rogers’ analysis to find out why investors are sitting on their hands.

3.20pm:A shadow looms over Coles

The fourth week of August is when Coles and Woolworths announce their results. There is no bigger week in the retail-reporting calendar, writes Robert Gottliebsen. Coles reports tomorrow.

But in 2016, there is an elephant in the room which may change the way Australian retail is conducted and impact the profit base of Coles, Woolworths, Bunnings, Big W, Kmart, Target, parts of Metcash and an array of other big retailers.

And the elephant might even change the whole industrial relations system and when combined with the backpacker tax, which will escalate food prices, may lift the Australian inflation rate.
Read more

3.10pm:Woodside Senegal deal in doubt

Woodside Petroleum may have company in the chase to buy Conoco Phillips’ Senegal assets as the latter’s joint venture partner FAR Ltd hints it may be willing to take on the Perth-based behemoth, writes Daniel Palmer.

Woodside last month agreed to pay $US430m ($563m) to secure control of Conoco’s Senegal unit, but the deal was left open to counter offers from the target’s joint venture parties given their pre-emptive rights.

The talk of a lowball price was rumoured to have spurred interest from both ASX-listed FAR and fellow JV partner Cairn Energy and while the latter has since distanced itself from the prospect, FAR today provided a signal it is keen to put forward a rival bid.
Read more

2.52pm:Uber is about to be legalised in Victoria

Uber will be legalised in Victoria with all commercial passenger vehicle providers to be charged a levy of $2 per trip to fund the transition to the new system, Premier Daniel Andrews has announced.
AAP
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2.36pm:Monadelphous monstered on earnings miss

Monadelphous shares are being hammered today by brutal shareholders despite presenting what CLSA called an “okay” result.

Net profit, revenue and EBIT all came in below consensus estimates, the company offered no guidance but called resources and energy markets “challenging”, which saw investors flee.

At just before 2:10pm AEST the shares were down 17 per cent to $9.07, compared with a 1 per cent rise from the ASX 200.

“Balance sheet is very close to where we thought it would be, but guarantees and performance bonds are have fallen by nearly 50 per cent. Result looks ok, despite being slightly down on market, with strong B/S to help drive positive momentum going forward,” CLSA said.

In less than two months Monadelphous stock rocketed almost 56 per cent before today’s dive. Investors didn’t need much of an excuse to book profits.

2.18pm:Blue-chip bounceback is in full swing

Local stocks have just touched a fresh intraday high as blue-chips boost the index.

At just before 2:10pm AEST the S&P/ASX 200 was 1 per cent higher for the day at 5570 points — looking set to rebound from yesterday’s 0.4 per cent slide.

The big four banks are doing most of the heavy lifting, adding between 1.1 per cent and 2.2 per cent, while a 2.1 per cent rise from CSL is also helping out.

Telstra is up 0.7 per cent, while Rio Tinto edged 0.4 per cent higher and BHP Billiton gains 0.8 per cent.

Bellamy’s Australia is the best performer on the 200 today with a 5.3 per cent rise to $14.95 — its highest level in eight months. The powdered milk company has shot up almost 11 per cent in two days.

1.57pm:Investors shun Lovisa

Jewellery retailer Lovisa has seen its shares slump as much as 12 per cent as it reported weaker profit for FY16, writes Daniel Palmer.

For the year to June 30, Lovisa announced a 6 per cent slide in net profit to $16.6 million despite a 14.3 per cent jump in revenue to $153.5m.

Lovisa shares stumbled as investors took profits after pushing the group’s value up 23 per cent over the past fortnight in the hope glum guidance could be topped.

The Brett Blundy-backed group has endured a torturous 2016 on the local market after receiving a warm welcome for the 12 months following its successful ASX debut in December 2014.
Read more

1.40pm:Petrol retailers under the pump

Twenty per cent of the convenience store spending is done at petrol stations and Caltex boss Julian Segal wants to tilt the balance his way, by rolling out a new model to take a lock of the market, writes John Durie.

Longer term the model makes plenty of sense because the petrol station we know today will clearly change in the decades ahead, with electric cars and driverless cars taking more of the market.

After a long study with Bain, Segal will roll out around 20 pilot stores early next year to test the market.
Read more of John Durie’s analysis

1.20pm:Time to sell Fortescue?

Time to cash in your chips, Fortescue shareholders. That’s the message coming from Credit Suisse today after the iron ore miner unveiled a near-$1bn profit and record dividend earlier this week.

Credit Suisse has revised its price target for Fortescue. Colin Murty The Australian

Analysts, led by Paul McTaggart, say they still like the stock, just not after such a huge rally.

“Fortescue shares have had a very good run — up 21 per cent in a month, 68 per cent in three months and 148 per cent in six months,” Mr McTaggart said.

“We’ve set our revised target price at $4.50/shr, the midpoint of our spot-based and base case DCF valuations.

“With China steel production expected to slow into October/November, we do expect China steel price to moderate and iron ore prices to follow suit. As a result, we are downgrading our FMG rating from Neutral to underperform.

“We like the FMG story, just not at the current share price and heading into the period of seasonal steel production weakness.”

The move puts Credit Suisse firmly in line with the majority view on Fortescue. Bloomberg data show just three ‘buy’ ratings on the stock, including JP Morgan and Macquarie, five ‘hold’ recommendations and 12 ‘sell’ ratings.
Read Stephen Bartholomeusz’s analysis on Fortescue’s result.

1.03pm:Mining services smashed

The mining services sector is again on the nose after investors were left disappointed with market updates from Monadelphous Group and Bradken today and talk of a potential collapse at Boart Longyear yesterday.

In lunchtime deals Monadelphous plunged 16 per cent, while Bradken tumbled 5 per cent and Boart Longyear extended yesterday’s retreat by a further 3.2 per cent.

Other big names in the industry also gave back some of their recent gains, with Worley Parsons sinking 4.9 per cent, UGL off 2.7 per cent, Downer EDI easing 0.5 per cent and Seven Group dipping 1.6 per cent at 12.45pm (AEST).
Read Daniel Palmer’s full report here

12:40pm:Casino mogul a rival for Crown

US tycoon Steve Wynn has opened a $US4bn mega-resort in Macau — complete with giant lake, musical fountains and cable cars — as the Chinese casino enclave battles to turn around its fortunes.

The opening is set to intensify competition in the struggling gambling hub, where the James Packer-backed Studio City is already battling a slump in demand following its opening last year.

At a ceremony attended by 1000 guests, Mr Wynn launched the Wynn Palace: 560,000 square metres of entertainment with a central casino, more than 50 shops, 13 restaurants and 1700 hotel rooms starting at under $US300.
AFP

Read more

12.18pm:Scentre Group eyes Westfield Sydney expansion

The Frank Lowy-chaired mall giant Scentre Group has booked a solid increase in interim profit as it looks to expand Westfield Sydney.

Scentre (SCG) today logged a profit of $1.15bn for the six months through June, an increase of 6.6 per cent year on year.

Revenue for the group, which remains focused on the local market after the US and European assets were spun out of Westfield Group in 2014, fell 5.2 per cent over the six months period to $1.28bn.

Read Michael Roddan’s full earnings take here.

11.58am:Banco Santander heads for the exit

Spanish banking giant Banco Santander SA is pulling up stumps from Australian market, the latest in a string of high-profile lenders to exit the country.

As Michael Roddan writes, Banco Santander, one of the largest companies in the world and at one point Europe’s largest bank, opened its first branch in Australia in 2012 in a bid to increase its presence in the Asia-Pacific region.

According to the latest APRA figures, Santander had around $160m worth of loans on its books at the end of June, mostly lent out to businesses. Last year the bank was part of syndicates lending to Glencore Australia, Orica Finance and DP World Australia.
More to come

11.40am:oOh!Media result ends stock dive

Ooh! Media CEO Brendan Cook.

Outdoor advertising company oOh!Media has recovered some of yesterday’s share price losses, lifting 6.8 per cent after booking a profit of $6m for the half year through June. The profit rise was an increase of 53 per cent year on year, while revenue increased 18 per cent to $146.6m.

Yesterday, the outdoor advertising company saw its share price slump 15.77 per cent on concerns the industry’s golden run may have come to an end.

oOh!Media (OML) was floated in late 2014 by Champ Private Equity and has seen strong growth driven by the digitisation of its billboards and signs, and will pay a 4c interim dividend, writes Michael Roddan.
Read more

11.10am:Telcos, banks push ASX higher

The Australian sharemarket has risen in early deals as strength in the financial and telecommunications sectors offset the impact of weaker commodity prices on resources stocks.

At 10.30am (AEST), the benchmark S&P/ASX 200 index lifted 16.3 points, or 0.3 per cent, to 5,531.4, while the broader All Ordinaries index climbed 14.1 points, or 0.25 per cent, to 5,626.6.

A positive early showing was seen by the telco sector after Vocus delivered a record profit, with its shares rising 2.9 per cent in response, writes Daniel Palmer.

The Australian sharemarket has risen in early deals. Britta Campion / The Australian.

The news helped the broader industry, with market leader Telstra adding 0.55 per cent and TPG advancing 1.2 per cent.

In retail, Kogan edged up 0.6 per cent after comfortably outstripping its prospectus forecasts, while Rivers owner Specialty Fashion plunged 15.6 per cent despite narrowing its full year loss.

Earnings season was also seen drawing plenty of attention in the energy sector as Oil Search dipped 1.4 per cent despite matching market expectations for the half year, Caltex eased 1.5 per cent as a lift in profit was offset by news of a dip in revenues and Senex trading flat after trimming its loss.

Other big names in the sector were trading in the red after oil prices skidded 3 per cent overnight, with Santos off 1.1 per cent and Woodside yielding 0.8 per cent.

Elsewhere, shopping centre owner Scentre inched up 0.3 per cent after logging a 6.6 per cent rise in profit, software group Aconex tumbled 5 per cent as it reported a sharp slide in earnings, regional broadcaster Prime Media jumped 4 per cent as investors eyed better-than-expected underlying earnings over news the group swung to a loss and pathology giant Healthscope also tacked on 4 per cent after beating earnings expectations.

In finance, the big banks were all around half a per cent higher, with NAB’s 0.2 per cent rise trailing the sector and Westpac serving as the leader with a 0.8 per cent advance.

Meanwhile, the Australian dollar held above US76c after rising above that mark overnight as the US dollar lost momentum.

10.57am:Bradken shares smashed on results

Investors have pummelled Bradken despite the mining services provider narrowing its loss for the full year, sending its shares 17 per cent lower in early trade to $1.70.

The ASX-listed group (BKN) reported a $195.9m loss for the year to June 30, an 18.8 per cent improvement on fiscal 2015 due to a reduction in impairments and restructuring charges, writes Daniel Palmer.

Bradken said its underlying earnings dipped 13.1 per cent to $29.5m on the back of a 15 per cent slump in sales revenue to $820.6m.

Bradken shares last traded down 12.84 per cent at $1.90.
Read more

10.43am:Hospitals boost Healthscope

Australia’s second-largest private hospital operator, Healthscope, has notched up a solid increase in profit on the back of strong hospitals and New Zealand pathology margins, writes Michael Roddan.

Healthscope (HSO) today booked a profit of $182.8m for the year through to June, a 19 per cent increase year on year. Revenue for the group was up 6 per cent to $2.29bn.

Chief executive Robert Cooke said the strong result was underpinned by the robust performance of the group’s hospitals and New Zealand pathology divisions. Hospitals earnings were up 8.3 per cent while NZ pathology earnings increased 22 per cent.
Read more

10.33am:Oil Search profit plunges

Oil Search has reported a profit for the half year at barely a tenth of the level seen last year as depressed market conditions took their toll.

The result reveals Oil Search as the latest ASX-listed victim of the oil price slump as the reduced earnings came despite sales volumes rising 5 per cent to a record 15.2 million barrels of oil equivalent.

For the six months to June 30, the group reported a net profit of $US25.6 million, down 89 per cent from the corresponding result of $US227.5m last year as realised prices for oil and condensate slumped 27 per cent and prices for its gas and LNG product tumbled 40 per cent.
More to come

10.22am:Kogan tops float forecasts

Kogan.com has topped forecasts provided in the prospectus for its recent float. Renee Nowytarger / The Australian.

Online retailer Kogan.com has topped forecasts provided in the prospectus for its recent float, while reaffirming its expectations for growth in the coming year, writes Daniel Palmer.

The Ruslan Kogan-led group recorded pre-tax earnings of $4 million, more than double the result from fiscal 2015 and 37.9 per cent above guidance provided in its prospectus.

The retailer (KGN) outdid forecasts for after-tax earnings, swinging to a profit of $800,000, double its guidance.
Read more

10.00am:Vocus profit surges to record

Vocus delivered a record profit thanks to acquisitions. Hollie Adams/The Australian

Telecommunications group Vocus Communications has met guidance in delivering a record profit, thanks to the positive impact of acquisitions.

For the year to June 30, Vocus logged underlying earnings of $101.7 million, up 461 per cent, as it integrated the July 2015 purchase of Amcom and the February acquisition of M2 Group. The company said the consumer broadband space continued to be a strong driver of growth, with its NBN market share rising from 5.1 per cent to 6.4 per cent.
Read more

9.48am:ASX under pressure as earnings fall flat

Disappointing results from Monadelphous, Greencross and Virtus Health, combined with a tumble in oil prices overnight could see the Australian sharemarket come under pressure today despite a slight rise in overnight SPI 200 futures, says CMC chief market strategist Michael McCarthy.

After the battering of markets in the first half of the year there is an “eerie calm” blanketing stock indices globally, with volatility near historic lows despite “elevated risks and valuations”, he adds.

9.34am:Monadelphous results, outlook disappoint

Monadelphous shares look set for a tumble after disappointing results and outlook statements. FY16 net profit of $67m missed Bloomberg’s $70.5m consensus estimate by 5 per cent, with EBITDA of $113.6m and sales of $1.47bn also missing consensus estimates of $116.8m and $1.4bn respectively.

The engineering and construction services company blamed lower demand for construction work and delays on some existing projects.

To make things worse, the final dividend of 32c was well below the 55c market expectation and margins continued to deteriorate.

Monadelphous says the resources and energy markets are challenging, but feels it is well positioned to increase its market share in water and renewable energy work.
Read more

9.29am:Prime Media swings to a loss

Regional TV broadcaster Prime Media has swung to a loss in the full year, weighed down by impairments worth over $100m, writes Daniel Palmer.

Prime (PRT) delivered a loss of $93.5m for the 12 months to June 30, a sharp fall from last year’s $35.5m profit.

The red figure was driven by previously unannounced write-offs worth $122.9m relating to both the value of its TV licenses and goodwill.

Read more

9.19am:Aconex profit sinks 50%

Project management software company Aconex has posted a slide in profit despite a hefty increase in global revenues, writes Michael Roddan.

Aconex (ACX) today unveiled a profit of $5.7 million for the year ending June, a fall of 50 per year year-on-year. But revenue for the company, which was only added to the ASX200 in March this year, increased by 50 per cent to $123.4m, boosted by the acquisition of Conject.
Read more

9.13am:Senex endures second year in red

Oil and gas explorer Senex has continued to slash capital expenditure and cut costs in order to survive the oil price crash, but has closed a second year in the red, writes Michael Roddan.

Senex (SXY) today booked a loss of $33.2 million for the year through June, a significant improvement on the prior year’s $81m loss.

“Senex demonstrated a strong defensive response to deteriorating market conditions during the financial year,” chief executive Ian Davies said.
Read more

9.05am:More pain ahead for BHP

The world’s biggest miner is expected to drop 1 per cent, according to its ADRs. Aaron Francis/The Australian

Aussie stocks are expected open little changed following a lacklustre session on Wall Street, with the SPI200 pointing to a flat but fair value suggests a 0.3 per cent rise could be more likely.

It’ll be worth keeping an eye on BHP Billiton at the open. The world’s biggest miner is expected to drop 1 per cent, according to its ADRs, which will add to a 1.6 per cent fall yesterday. The stock last traded at $20.95.

The price of iron ore edged 0.5 per cent higher overnight, but falling oil prices are a thorn in its side.

8.55am:Earnings season turns sour as brokers downgrade

Earnings season appears to have taken a turn for the worse, with the following downgrades today:

Fortescue Metals cut to Underperform vs Neutral — Credit Suisse

Spark Infrastructure cut to Neutral vs Outperform — Credit Suisse

NIB cut to Underperform vs Neutral — Credit Suisse

NIB cut to Neutral vs Outperform — Macquarie

IAG cut to Sell vs Hold — Shaw & Partners

Japara Health Care cut to Underweight vs Equalweight — Morgan Stanley

Primary Health Care cut to Underweight vs Equalweight — Morgan Stanley

IAG cut to Reduce vs Hold — Morgans

Seek cut to Sell vs Neutral — UBS

Mineral Resources cut to Hold vs Buy — Bell Potter

7.10am:Market set for flat start

The Australian market looks set to open flat or slightly higher after Wall Street closed little changed, as oil price falls weighed on energy stocks but biotech stocks put in a strong performance.

At 6.45am (AEST), the share price index was up two points at 5,493.

Locally, in economic news on Tuesday, the ANZ-Roy Morgan weekly consumer confidence survey is due out.

In Australia, the market yesterday closed lower amid mixed company earnings reports and a firmer expectation that the US central bank will lift its interest rate this year.

The benchmark S & P/ASX200 index was down 11.6 points, or 0.21 per cent, at 5,515.1 points.

The broader All Ordinaries index was down 13.1 points, or 0.23 per cent, at 5,612.3 points.

7.05am:Dollar gains against the greenback

The Australian dollar has lifted against its US counterpart after the greenback shed early gains.

At 6.35am (AEST), the local unit was trading at US76.29 cents, up from US75.97 cents yesterday.

6.59am:Iron ore edges higher

The iron ore price has edged higher, hovering slightly below its recent three-month peak as pure play producer Fortescue Metals Group offered a vote of confidence in the commodity’s outlook.

Iron ore added 0.2 per cent to $US61.10 a tonne overnight, according to The Steel Index, from $US61 in the previous session.
Read more

6.45am:Oil weighs on Wall Street

US stocks slipped overnight, led by losses in energy shares.

The Dow Jones Industrial Average slipped 23 points, or 0.1 per cent, to 18529. The S & P 500 fell less than 0.1 per cent and the Nasdaq Composite rose 0.1 per cent.

European shares also drifted lower as traders waited for a key speech from US Federal Reserve chair Janet Yellen later this week, which could offer clues as to the timing of interest rate hikes.

The Australian share market is set to defy the lacklustre global leads and rise this morning, with ASX futures up five points at 6.25am (AEST).
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