Business Now: Live coverage of financial markets and companies, plus analysis and opinion
Currency markets are speaking volumes following today’s key presidential debate.
- Moody’s warns on banks
- FMG throws BC Iron a lifeline
- Stocks lift in early trade
- Mexican peso surges
- CIMIC launches bid for UGL
- Rinehart swoops on Kidman
Welcome to the BusinessNow blog for Monday, October 10. Gina Rinehart has swooped on the S. Kidman & Co cattle company, while Donald Trump and Hillary Clinton have gone head to head in the second US presidential election debate.
4.35pm:ASX inches higher
The Australian sharemarket has eked out a modest gain to start the week higher as strength in the banks and miners overcame weakness in the energy sector, writes Daniel Palmer.
At the close, the benchmark S&P/ASX 200 index climbed 8 points, or 0.15 per cent, to 5,475.4.
The benchmark index had pushed up almost 0.5 per cent in morning deals, but faded in the afternoon as Hillary Clinton failed to secure a clear victory in the latest US presidential debate.
“Markets clearly look upon a Trump presidency as a risk factor but appear to be pricing an assumption that it’s fairly unlikely to happen,” CMC Markets chief market analyst Ric Spooner said.
The muted overall activity belied a sell-off in the energy space as momentum was sapped from crude prices over the weekend.
4.01pm:Origin taps second APLNG train
Origin Energy has produced the first cargo at the second of two production trains at its flagship Australia Pacific LNG project, Daniel Palmer writes.
The latest milestone on the $24.7 billion project, jointly owned by US-based ConocoPhillips and China’s Sinopec, represents the last of six trains across three giant developments on Curtis Island in Queensland to begin production.
Other projects completed in the region include the Santos-led Gladstone LNG and the Shell-controlled Queensland Curtis LNG.
3.42pm:ASX pares intraday rise
Australia’s S&P/ASX 200 share index has pared most of a 0.5 per cent intraday rise to be up 0.1 per cent at 5473 as real estate and energy have led falls in all sectors bar materials, financials and telcos.
Slippage in the local share market comes as WTI crude falls 0.9 per cent after falling 1.3 per cent on Friday, and US S&P 500 futures trim a 0.3 per cent intraday rise to 0.2 per cent after a stronger than expected presidential debate from Donald Trump.
3.05pm:Polls and markets disagree on debate outcome
A CNN poll of viewers finds Clinton won the second debate 57 per cent vs 34 per cent for Trump.
Markets say otherwise however, with US dollar recovering against the Mexican Peso to MXN19.04 after falling to a four-week low of MXN18.91 in the first 15 minutes of the debate.
USD/MXN hit a record high of MXN19.93 on the eve of the first presidential debate on September 27, given concerns that Mexico would be less competitive under Trump’s policies.
Perhaps more relevant to the public’s assessment of today’s debate was that 63 per cent of CNN viewers said Trump did better than expected vs 39 per cent for Clinton.
A YouGov poll showed Clinton won by a closer margin of 47 per cent to 42 per cent.
2.58pm:NAB sees second outage in a week
National Australia Bank has experienced another outage, with customers experiencing challenges
in using the bank’s cards at ATMs and EFTPOS terminals.
Andrew Hagger, chief customer officer within the bank’s consumer banking and wealth division, was forced to make an embarrassing second apology in a week after the group (NAB) experienced challenges processing payments on Tuesday night and Wednesday last week.
At 3pm AEST shares in NAB were 0.2 per cent higher for the day at $28.23, in line with the other big banks but noticeably down from its intraday high of +0.7 per cent.
1.55pm:Moody’s warns on rising bank risks
The risks confronting Australia’s big banks are on the rise as the office property market slows and the threat of an apartment glut grows, ratings agency Moody’s has warned.
In its latest review of the big four banks, the ratings agency pointed to the commercial real estate sector as a particular source of concern as resources companies pull back in Brisbane and Perth, an issue rarely brought up as much of the scrutiny has been swelling residential property prices.
Moody’s analyst Maadhavi Ramanayake said weak demand for office property could dampen the banks’ positions alongside settlement risks in the apartment sector, although limited exposure to commercial real estate tempers the threat.
“Australia’s major banks have been growing their commercial real estate (CRE) exposures modestly in recent years, and are thus vulnerable to the risks from higher office vacancy rates in Brisbane and Perth and settlement risks from a potential residential apartment oversupply in Sydney, Melbourne and Brisbane,” she said.
Daniel Palmer
1.40pm:Fortescue throws BC Iron a lifeline
Fortescue has thrown BC Iron a lifeline, agreeing to buy the 75 per cent stake in the Nullagine JV it doesn’t already own, for just $1.
Fortescue will assume BC Iron’s liabilities and obligations including the existing rehabilitation liability, except its US$1.5m debt obligation to Henghou Industries and a $5.2m payment in deferred state government royalties.
Nullagine mining was suspended in December 2015 due to low iron ore prices.
Fortescue said it will assess the viability of restarting operations in the coming months and it will pay BC Iron a royalty from sales of iron ore mined in the future which will be partially withheld, up to $7.5m, to offset obligations assumed by the miner.
1.30pm:Trump troubles buoy the Aussie
The Australian dollar pushed above US76c as the second US presidential debate got underway.
At noon (AEDT), the local unit was trading at US76.03c, up from US75.73c on Friday.
AxiTrader chief market analyst Greg McKenna said the controversy surrounding Republican Donald Trump’s presidential campaign had helped buoy the Aussie.
“The apparent implosion of Donald Trump’s presidential campaign has led some traders to anticipate a risk — on rally after today’s presidential debate between the two nominees,” he said.
1.22pm:Banks, miners drive ASX higher
The Australian sharemarket has been led higher by gains in financial and mining stocks.
The benchmark S&P/ASX200 index has given up some of its early gains but was still up 0.28 per cent to 5,482.6 points at noon (AEDT), with the big four banks in the vanguard despite a soft lead from Wall Street in the wake of a weaker-than-expected US jobs report.
The broader All Ordinaries index was up 15.3 points, or 0.28 per cent, at 5,563.8 points.
Commonwealth Bank rose 22.0 cents, or 0.30 per cent, to $74.60; Westpac lifted 26 cents, or 0.85 per cent, to $30.83; ANZ gained 10 cents, or 0.35 per cent, to $28.36 and National Australia Bank was 18 cents, or 0.64 per cent, better off at $28.35.
Mining giant BHP Billiton was up 21.0 cents, or 0.90 per cent, to $23.51 and rival Rio Tinto has risen 11 cents, or 0.21 per cent, to $52.11.
1.03pm:ACCC gives GSK the all-clear
The ACCC has abandoned plans take legal action against GlaxoSmithKline over alleged false and misleading statements after deciding its case wasn’t good enough, writes John Durie.
Instead, ACCC chair Rod Sims today issued a strong warning to the drug company that it was being watched.
The investigation began late last year when Health Minister Sussan Ley attacked the drug company for blaming an increase in pricing for its Panadol Osteo product on PBS changes.
12.01pm:BARTHO: A closer look at ‘flash crashes’
From Stephen Bartholomeusz’s column today:
It would be easy to write off last Friday’s dramatic plunge in the pound as an isolated incident sparked by the increasingly tough talk from European leaders about the terms of the UK’s Brexit. “Flash crashes” like the 6.1 per cent dive in the value of the pound against the US dollar in Asia on Friday — in the space of a couple of minutes — appear, however, to be coming more frequently across a range of financial markets.
In 2010, the US stockmarket fell more than nine per cent, briefly wiping off more than $US1 trillion of market value.
In 2015, the market in US treasuries gyrated, with yields tumbling and then spiking within a 37 basis point range within a 12-minute period.
11.18am:UGL rockets on takeover bid
UGL shares have surged 48 per cent in morning trade, after engineering and construction giant CIMIC made a hostile $524 million play for control of its smaller rival.
CIMIC shares have risen as much as 3.3 per cent after the announcement.
Daniel Palmer
11.01am:First tick for Sirtex cancer treatment
Sirtex Medical says a pilot clinical study found its novel cancer treatment is safe for use in patients with primary renal cell carcinoma, the most common form of kidney cancer.
The study was the first into the use of Sirtex’s SIR-Spheres product — where tiny radioactive beads are inserted into the blood supply to fight cancer from the inside — for treating cancer outside of the liver.
Read more
10.23am:Stocks lift in early trade
The Australian sharemarket has pushed higher in early deals, aided by a steady offshore lead and the diminishing prospect of a Trump presidency, writes Daniel Palmer.
At the 10.15am (AEDT) official market open, the benchmark S & P/ASX 200 index climbed 21 points, or 0.38 per cent, to 5,488.4, while the broader All Ordinaries index added 21.6 points, or 0.39 per cent, to 5,570.1.
CMC Markets chief market analyst Ric Spooner said investors were comfortable with steady, if unspectacular, US data and had welcomed news of horrific comments from Donald Trump that have seen him shunned by some former Republican supporters.
10.15am:Mexican peso surges ahead of debate
A video showing Donald Trump lewdly boasting about forcing himself on women could end up being a positive for markets today, according to CMC Markets’ Ric Spooner.
The US dollar has dropped 1.7 per cent against the Mexican Peso today to trade at MXN/USD 18.98, which has been taken as a sign Trump’s chances of a win are dwindling, while the S & P500 futures are 0.3 per cent higher, which is a solid move in early Asian trade.
“While US jobs data on Friday did little to change the market outlook, the weekend’s political developments and today’s presidential debate may be a positive for markets,” Mr Spooner said.
“Markets clearly look upon a Trump presidency as a risk factor but appear to be pricing an assumption that it’s fairly unlikely to happen. Even so, if today’s debate produces a Clinton win and cements the damage of the recent tapes to Trump’s prospects, markets may respond positively as the risk of a Trump victory becomes even less likely.”
Follow PoliticsNow for rolling coverage of federal and international politics
9.44am:CIMIC launches hostile bid for UGL
Engineering and construction giant CIMIC has made a hostile $524 million play for control of smaller rival UGL.
CIMIC is offering UGL shareholders $3.153 per share, a robust 47.2 per cent premium to the group’s last traded price of $2.14.
The proposed off-market takeover has been tagged as “final” by the suitor, with the move to go direct to shareholders seeing it bypass the need for board approval.
CIMIC emerged as a 13.84 per cent shareholder of UGL after a special crossing at $3.15/share this morning.
CIMIC plans to fund the offer with its existing funds and debt facilities.
UGL has yet to formally respond to the takeover offer.
Daniel Palmer, David Rogers
9.40am:Steel deals in doubt as coal surges
A dramatic surge in the spot price of Australia’s second-biggest export, coking coal, has seen Japanese steel mills delay new contract settlements that would deliver big gains to Australian miners, in a standoff over an expected doubling of the contract price that could spell the end of the current pricing system, writes Matt Chambers.
Australian coking coal spot prices have surged 155 per cent since the start of June to a four-year high of $US213 per tonne as China cracked down on mining overcapacity at the same time that government stimulus fired the housing market, while rain and derailments hit Australian supply.
9.13am:IAG finalises share buyback
Insurer IAG has finalised the share buyback it announced on August 19, writes Daniel Palmer.
The company said the program would see $314 million worth of stock eradicated from its register, slightly above the $300m figure flagged when the buyback was announced in August.
This amounts to approximately 64 million shares and around 2.6 per cent of IAG’s issued stock.
9.11am:Gold miners dazed and confused
Australian gold miners will still be dazed — asking each other if anyone got the licence plate of that truck that hit them last week.
Over the five days gold stocks were smashed as the price of the yellow metal tumbled 4.5 per cent to $US1,257.08 — its worst week in 11 months.
Resolute Mining slumped 14.2 per cent, Northern Star lost 14 per cent, St Barbara fell 13.4 per cent, Regis Resources dropped 12.6 per cent, Evolution gave up 11.9 per cent and Newcrest — the country’s biggest gold producer — fell 8.5 per cent. The broader S & P/ASX 200 gained 0.6 per cent over the week.
As global bond yields recover and volatility is seen to be subsiding, the appeal of the zero-yield gold is falling away quickly.
The same problem is being felt by high yield Australian stocks like Transurban, Sydney Airport, Westfield, Scentre and Telstra, which have found themselves under pressure as treasury yields regain ground.
9.00am:Broker rating changes
UGL raised to Buy vs Hold — UBS
Downer cut to Hold vs Buy — Deutsche Bank
Estia Health cut to Hold vs Buy — Shaw & Partners
Bank of Queensland cut to Sell vs Neutral — UBS
Bank of Queensland resumed at Hold — Morgans
Magellan Financial raised to Outperform vs Neutral — Credit Suisse
QBE cut to Hold vs Buy — Bell Potter
Investa Office Fund cut to Sell vs Neutral — UBS
8.55am:Stocks to tiptoe higher
Australian stocks look set to tiptoe higher this morning as October’s positivity continues to flow through the market.
The SPI 200 is this morning pointing to a 0.2 per cent rise, which would see the local index add to last week’s 0.6 per cent gain.
The ASX 200 has now seen three positive weeks in a row and last traded at 5467.4 points.
BHP Billiton’s ADRs are pointing to a flat start, with the price of iron ore remaining unchanged as China wraps up their National Week celebrations.
Investors will be keeping their eye on the oil price, which fell 1.8 per cent in the most recent session to trade at $US49.81.
Over the last five years October has been the best performing month of the year for the S & P/ASX 200, with an average 4.6 per cent piled on.
8.45am:Rinehart swoops on Kidman empire
Mining billionaire Gina Rinehart has defused the political controversy over the nation’s biggest cattle holdings by lodging a $365 million bid for the historic company, ending talk of it falling into the control of Chinese investors.
Mrs Rinehart launched the move on the S. Kidman & Co cattle company last night in a huge step towards building her own rural empire with as many as 185,000 cattle and a collective land area 1 ½ times the size of Tasmania.
The bid also eases one of the federal Coalition’s biggest political nightmares after Scott Morrison triggered outrage from foreign investors earlier this year by rejecting a Chinese bid for the company, leaving it struggling to find an alternative buyer.
Read Sue Neales’s analysis:Chinese find model to buy the farm
8.37am:Rio under pressure over Oyu Tolgoi
Rio Tinto’s chief executive is under growing pressure from investors and analysts to justify the mining giant’s decision to build one of the world’s most expensive mines in Mongolia.
Shareholders are concerned that the $US12bn ($15.8bn) project, Oyu Tolgoi, could be a financial disaster. They have begun to question management about the financial and technical assumptions underpinning the initiative.
Rio has organised a trip for analysts and investors to the copper project this month where it will seek to allay their concerns.
The unrest is the first big test for Jean-Sebastien Jacques, the former L’Oreal executive who took over as boss of the resources giant three months ago. Before taking the job, he oversaw Oyu Tolgoi and led the talks to break an impasse with the Mongolian government that had led to a three-year freeze in its development.
The Times
Read more
7.00am:Australian market set to open higher
The Australian market looks set to open slightly higher despite major international markets falling in the last session.
At 6.45am (AEDT), the share price index was up eight points at 5,458.
Data showed that US employment growth unexpectedly slowed for a third month in September and the jobless rate rose. Non-farm payrolls rose 156,000, less than August’s 167,000 gain, the Labor Department said.
Locally, in economic news today, theAustralian Bureau of Statistics is set to release August overseas arrivals and departures figures.
No major equities news is expected.
However, National Australia Bank chief executive Andrew Thorburn is slated to speak at a QUT Business Leaders’ Forum in Brisbane.
The CEDA State of the Nation conference is on in Canberra.
In Australia, the market on Friday closed lower as markets waited for the latest US jobs data that is likely to influence the timing of an expected Federal Reserve interest rate rise.
The benchmark S & P/ASX200 index fell 15.6 points, or 0.28 per cent, to 5,467.4 points.
The broader All Ordinaries index lost 6.3 points, or 0.29 per cent, to 5,548.5 points.
AAP
6.50am:Dollar lifts
The Australian dollar has risen against the US dollar.
At 6.35am (AEDT), the local unit was trading at US75.97 cents, up from US75.73 cents on Friday.
AAP
6.40am:Iron ore slips further
The price of iron ore has continued to fall further below federal budget estimates, even after the upgrade of a separate government forecast on the back of the commodity’s surprising strength, writes Elizabeth Redman.
Iron ore slipped 0.2 per cent to $US54.40 a tonne in the most recent session, according to The Steel Index, from $US54.50 the previous day.
Add your comment to this story
Trump’s trade war tariff thaw
In a thawing of relations, the US will delay raising tariffs on Chinese goods after “substantial progress” in trade talks.
China puts heat on coal miners
Shares in pure-play coal miners pared early sharp losses as fears of China port ban eased throughout the session.
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout