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

Ardent Leisure shares lost nearly 8 per cent after four deaths at Dreamworld.

Fortescue shares are at a two-and-a-half-year high after surging more than 5 per cent

• Ardent shares slump
• Why FMG is soaring
• WorleyParsons shares wobble after AGM
• Bega chairman cuts the cheese
• Bendigo hits out at royal commission
• Tapering good for equities: JPM
• Aconex soars as investors cheer
• Bega Cheese tanks
• Bell Potter bullish on Bellamy’s

Welcome to the BusinessNow blog for Tuesday, October 25. Ardent Leisure shares slumped on reports of a death at Dreamworld, while Fortescue surged to a two-and-a-half-year high.

8.11pm:Carbon footprint ‘impacts share price’

The size of a company’s carbon footprint has an identifiable - and negative - impact on its share price, a study by global asset manager AXA Investment Managers has found.

The study found that investors consistently implied a negative impact on share price due to the carbon dioxide output from a company, similar to other expenses.

Analysis by AXA IM’s quantitative equities manager Rosenberg Equities examined share prices of companies in relation to their carbon footprint to determine any contribution that investors assign to carbon.

‘The carbon considerations are baked into investors’ assessments. So, they expect to pay less for that company over time,” Rosenberg Equities’ director of investment strategy Kathryn McDonald said.

“This means that, all else being equal, a company’s valuations would be lower if its carbon footprint is higher.” Investors appear to be already implicitly treating carbon as an expense, when it is modelled as an expense item, according to the analysis.

“When we think about carbon, we can think about it as something companies can spend in pursuit of revenue,” Ms McDonald said.

“So, it can be thought of as part of their regular operating process, similar to a normal expense.” The research was based on carbon data disclosures reported annually by US and Canadian companies over a roughly 10-year period ending May 2016. The data relates to greenhouse gas emissions generated from burning fossil fuels and production processes owned or controlled by the company, plus emissions by its direct suppliers.

The analysis found that, over the entire period, the implied price for a tonne of carbon was about $US10 on average, but varied at different points, reflecting changing investor sentiment.

The valuation was primarily skewed by three sectors - utilities, energy and materials.

Ms McDonald said the results of the study highlight that current methods of valuing the potential negative risk related to greenhouse gas emissions may be insufficient, as they miss the effect on share price.

Accounting for carbon as a line item in a company’s income statement allows investors to see the additional impact from carbon, she said. This would imply that investors should give a ‘haircut’ to current valuations for companies with a big carbon footprint - such as coal producers.

AAP

7.43pm:German business outlook at 2.5yr high

German business sentiment rose to a 2.5-year high in October, a sign that Europe’s largest economy has started to pick up speed, according to the Ifo institute’s monthly survey of about 7,000 companies.

The Ifo institute on Tuesday said that its business climate index rose to 110.5 points in October from 109.5 in September, reaching the highest level since April 2014.

Economists polled by The Wall Street Journal had forecast a slight decline in the closely watched sentiment indicator.

German companies were more satisfied with their current business situation and expressed “far greater optimism” about the months ahead, Ifo President Clemens Fuest said. “In construction, the business climate indicator continued its record-breaking run.” Dow Jones.

7.21pm:Inflation unlikely to sway RBA

Confirmation that inflation has now been below the Reserve Bank’s target range for two full years will neither surprise nor worry the central bank. The consensus among economists is for a quarterly rise of 0.5 per cent or so in the September quarter consumer price index (CPI) to be reported on Wednesday.

But even top-of-the-range forecasts like the 0.9 per cent tipped by Westpac’s economists, factoring in some one-off and seasonal price rises, would mean annual inflation of only around 1.5 per cent.

That would be up from the previous 1.0 per cent but still way below the RBA’s 2 per cent to 3 per cent target band - just as it’s been ever since the year to September 2014.

But that two-year stretch would not be the longest run of below-target inflation inflation since the RBA announced the policy in early 1993.

In the late 1990s, annual growth in the CPI stayed under two per cent for over three years in a row.

And it’s been over the top of the range for several stretches of a year or more as well.

But that’s perfectly normal.

New RBA governor Philip Lowe went out of his way in a speech last week to say that inflation has been outside the band, either above or below it, for about half the time since the target was adopted, as anyone who’s been paying attention would already have noticed.

And he pointed out that despite those excursions, the average rate has still been close to the middle of the band.

Dr Lowe said inflation will gradually pick up over the coming couple of years and would probably still be closer to the bottom than the top of the range after that time, but he emphasised the flexibility built into the policy framework. And that freedom to stray, a consistent feature of the RBA’s approach right through the target’s 23-year life, means the RBA can tolerate and other year or two of below-the-band inflation.

But only on one condition.

But the RBA will have to be convinced it’s heading in the right direction, That depends on whether the economy can generate enough momentum to lift wages growth, the major driver of inflation over the long haul.

And that in turn means data showing the economy’s momentum - like economic growth, building industry figures, consumer spending, and employment growth - will be the signposts, not the quarterly CPI numbers.

The RBA board’s latest monetary policy meeting on October 4 dwelt at length on employment, housing and other growth-related aspects of the economy. But they did not specify the inflation rate - nor even note that it was currently below target.

The RBA’s focus is on forward-looking indicators of growth and its own updated forecasts, to be published in the quarterly Statement on Monetary Policy on Friday week.

The CPI, in contrast, is mainly affected by trend in economic growth a year or two ago, so is among the most backward-looking data on the economic calendar. AAP

6.22pm:Dreamworld tragedy to hit tourism

Ben Wilmot, Lisa Allen

Queensland’s $20 billion tourism industry is expected to be hit hard by the Dreamworld fatalities, while the company’s share price plunged nearly 8 per cent in the final hours of trade.

As news of the tragedy hit world headlines, tourism officials claimed the tragedy could impact international holiday maker arrivals heading to Queensland with the state’s economy relying on the tourism industry, which employs nearly 200,000 staff.

Four adults were this afternoon killed on Dreamworld’s Thunder River Rapids Ride, which reaches speeds of up to 45 kilometres per hour. On its website Dreamworld describes the ride as “rough and jolty yet fun and enjoyable.”

The 35-year-old park has sustained several safety issues over the past few decades, but it was unclear this evening how long the entire park would close during what is expected to be a lengthy police investigation, rendering the $95 unlimited season passes bought by thousands of theme park goers for the popular summer season all but worthless.

Ardent Leisure Group will keep Dreamworld closed on Wednesday, and is working closely with police, emergency services and other authorities to establish the facts around the deaths “as quickly as possible.”

“Dreamworld’s focus and priority is with the families of those involved in this tragedy and will be providing an update to the public as soon as information becomes available,” Ardent said.

The group’s shares closed 7.84 per cent lower at $2.35. Read more.

5.45pm: Dollar bounces on commodities lift

The Australian dollar has recovered in Tuesday trading to close slightly up against the greenback, ahead of the release of key inflation figures on Wednesday.

At 5pm (AEDT) on Tuesday, the local unit was trading at US76.34 cents, up from US76.25c on Monday.

The local currency lost ground against the greenback in morning trade but bounced from US76c at midday, on the back of a lift in commodity prices in Asian trading during the afternoon session. Read more.

5.40pm:Woolies uplift expected

Analysts are expecting Woolworths’ first quarter sales to show signs the business is turning around when it posts results this week, while rival Coles’ strong growth is expected to ease.

Woolworths will reveal its first-quarter sales results on Friday, two days after rival Coles, owned by Wesfarmers, releases its numbers for the same period.

Woolworths’ share price has rallied in the past two months on expectations same-store food and liquor sales, a key measure of revenue growth, will rise in what will be the first quarterly increase since the third quarter in 2015. Read more.

5.22pm: Tokyo stocks lift firmly

Tokyo stocks rose Tuesday as a fall in the yen boosted exporters, while Kyushu Railway skyrocketed on its trading debut after one of the year’s biggest initial public offerings.

Tokyo’s benchmark Nikkei 225 index had gained 0.76 per cent, or 130.83 points, to 17,365.25 by the close, while the Topix index of all first-section issues was up 0.71 per cent, or 9.71 points, to 1,377.32. AFP

4.40pm:Miners, banks push ASX higher

The Australian sharemarket has surged into a stronger close thanks to strength in the materials and financial sectors throughout the session.

At the close, the benchmark S&P/ASX 200 index jumped 34.3 points, or 0.63 per cent, to 5,442.8, while the broader All Ordinaries index rallied 34.2 points, or 0.62 per cent, to 5,523.3.

The materials sector shone brightest among the major sectors, aided by a fresh seven-week peak in iron ore prices.

The news, coupled with an upbeat investor presentation from Fortescue, pushed materials up almost 1 per cent by the close.

Fortescue led the way in surging 6.5 per cent to a new two-and-a-half-year high of $5.44, while BHP bounced 0.4 per cent to $23.19 and Rio Tinto jumped 2.4 per cent to $52.48.

4.15pm:Ardent slumps on Dreamworld death reports

Ardent Leisure shares have lost more than 10 per cent in just over 20 minutes following unconfirmed reports a person has died at the company’s Dreamworld theme park on the Gold Coast.

At the 4.15pm (AEDT) market close, the stock had slumped 11.7 per cent to $2.35.

Read:Death at Dreamworld

Ardent Leisure shares slumped after reports of a death at Dreamworld

#BREAKING:A person is believed to have died and several others seriously injured at #Dreamworld on the Gold Coast. https://t.co/TRzRl330M7 pic.twitter.com/dJGsgquPXq

— The Australian (@australian) October 25, 2016

One person reportedly killed and three others injured in accident at Dreamworld. #9News https://t.co/xjwnl9IcfD

— Nine News Sydney (@9NewsSyd) October 25, 2016

3.48pm:Tabcorp dodges exec pay strike

Tabcorp has just managed to dodge a humiliating strike on executive pay as it told investors its proposed $11.3 billion takeover of rival Tatts would not serve as a distraction through what is expected to be an elongated approvals process, writes Daniel Palmer.

A vote on the group’s remuneration report revealed 22.7 per cent were against the level of executive pay

A vote on the group’s remuneration report revealed 22.7 per cent were against the level of pay provided to key executives, which included a near half a million dollar jump in the package received by chief executive David Attenborough to around $3.2 million despite a slide in profit.

The figure just fell short of the 25 per cent protest vote required for a strike against the board.

Read more

3.16pm:Star share slump overdone: CS

The share price hit to Star Entertainment Group on the back of the Chinese arrests of Crown Resorts’ staff has been overdone, according to analysts, who back the casino company’s outlook.

Credit Suisse says the Star looks cheap, with a bearish outlook priced in for its VIP business

Credit Suisse analyst Larry Gandler said the Star looked cheap, with a bearish outlook priced in for its VIP business on the back of the arrest of staff from the James Packer-backed company.

Around $600 million has been wiped from the Star’s market value since the Crown drama unfolded, which Mr Gandler said implied a virtual destruction of the Star’s VIP business.

Investors fear the fallout from the Crown case could impact VIP revenue across the industry and slow Chinese visitation to Australian resorts.

3.04pm:Starpharma tips more licensing deals

Starpharma expects more licensing deals for its DEP drug delivery platform by June 2016, CEO Jackie Fairley tells Bloomberg.

Deals could be “along the same lines” of its agreement with AstraZeneca, Fairley says.

The company also expects its antiviral, antibacterial VivaGel condom to launch in Australia and Europe in the coming months.

The company is in late-stage negotiations for sales, marketing and distribution agreements for ViVaGel outside Australia and NZ.

Its shares jumped 3 per cent to a three-week high of $0.665.

2.45pm:FMG is soaring ... and chuckling

Moans and exasperated sighs will be heard around Australian broking firms today as Fortescue Metals manages to push even higher, mocking the majority negative view on the stock.

FMG’s share price has surged 5.4 per cent to a two-and-a-half-year high.

News delivered at today’s investor day that the miner plans to put aside another $800 million for debt repayment has sent the stock surging 5.4 per cent higher to a new two-and-a-half-year high of $5.38.

A 1 per cent rise in the price of iron ore overnight to $US59.28, a fresh seven-week high, is also boosting spirits around the pure-play iron ore miner.

Most analysts have been recommending investors steer clear of Fortescue, which is becoming more and more awkward as the shares refuse to fall.

In the year to date Fortescue has been the third-best performing stock on the ASX 200, with a whopping 195 per cent gain.

Bloomberg data show just three of the analysts covering the stock rate it a ‘buy’, while six recommend ‘holding’ and an overwhelming majority — 12 analysts — have a ‘sell’ rating on FMG.

The consensus 12-month price target is $4.23, 21 per cent below the current level.

2.16pm:WorleyParsons shares wobble after AGM

WorleyParsons’ shares dropped from $9.01 to $8.87 after weak commentary from its chairman at the AGM.

Chairman John Grill said the firm is yet to see any recovery in trading conditions. His comments echo similar commentary in August, when he said that trading conditions were likely to remain challenging.

The share price drop comes after the shares hit a 15-month high last week on the back of stronger oil prices.

Grill did say he expects underlying earnings to be biased to the second half.

And the firm won’t be paying cash bonuses to management staff in FY16.

WOR shares were last down 2.4 per cent at $8.94.

1.35pm:Bega chairman cuts the cheese

Bega shares have slumped even further during lunchtime trade and are now on track to record their worst fall on record as investors smelled something foul underneath the company’s partnership with vitamin giant Blackmores.

Investors are fleeing after chairman Barry Irvin spoke of the ‘very challenging business environment’.

At 1.17pm AEDT Bega shares had tanked 14.2 per cent for the day at $5.57.

At the day’s low the shares were sitting at a three-and-a-half-month low and it’s looking like it may be the company’s worst day since listing on the ASX back in August 2011.

Speaking today at the company’s AGM, Bega chairman Barry Irvin spoke of the ‘very challenging business environment’ — words that often see investors flee.

“The ongoing growth in dairy foods and the improved outlook for dairy commodities are expected to improve our financial performance in FY2017, however this improvement will be offset by a very challenging business environment for our dairy nutritionals platform particularly in infant formula and growing up milk powders,” Mr Irvin said.

Speaking specifically on the company’s joint venture with Blackmores, which sought to capitalise on the insatiable appetite for organic Australian baby formula in China, Mr Irvin warned of oversupply and regulation changes.

“While this time last year supermarket shelves were empty and customers in Australia and internationally were providing ever increasing orders, the combination of a regulation change in China, a supply response to the demand signals and the evolution of supply channels to market now sees significant discounting in the marketplace and signs of short term oversupply,” he said.

“This change in market circumstances has seen our expected sales not materialise at levels that were initially forecast and some strong headwinds for the partnership, particularly in the Australian market.”

While Bega may be having a nightmare session, the broader S&P/ASX 200 is up a healthy 0.6 per cent for the day at 5442.6 points.

12.31pm:Crown gives back morning gains

Crown shares have given back most of this morning’s solid bounce as investors remain cautious around the hammered gaming sector.

Crown shot up as much as 3.3 per cent at the open to $10.95, but by 12:15pm AEDT the shares were just 1 per cent higher for the day at $10.70. Crown remains 17.3 per cent below last Monday’s close thanks to news 18 employees have been arrested in China on suspicion of gambling crimes.

At 3.3 per cent up for the day, Crown was briefly on track for its best single session since August 17, but investors seem to have thought better of jumping on with any real conviction just yet.

At 12:15pm the broader S&P/ASX 200 is 0.6 per cent higher at 5441.8 per cent.

Read:Casinos take hit as Crown arrests rattle $10bn plans

Read:Crown arrests in China spark exodus

12.02pm:Bendigo hits out at royal commission push

Bendigo and Adelaide Bank boss Mike Hirst has admitted customer choice has been lacking in the finance sector, pointing the finger at a number of regulatory “free kicks” to its larger rivals.

The mid-tier bank also hit out at a Labor-led push for a royal commission into the banks, saying it would achieve no tangible results.

CEO Mike Hirst says a royal commission would achieve no tangible results.

In a speech at the group’s AGM in Bendigo this morning, Mr Hirst said the regional bank had delivered strong results over the past year in an environment that favoured the big four banks.

Daniel Palmer

Read more

11.30am:‘Tapering’ good for equities — JP Morgan

Tapering of quantitative easing policies, currently employed in Europe and Japan, would actually be good for equities in the current environment, according to JP Morgan.

JPM says tapering of QE policies would be good for stocks

The investment bank’s global asset allocation team says tapering will be positive for equities as the wave of inflows into the bond market would reverse and flow into stocks.

It comes as the firm’s global economics team says it’s increasingly confident that global growth is on the rise and inflation is re-emerging, with positive implications for corporate profits and capital spending. Its modelling says global corporate profits should rise by 5-10 per cent, while more moderate growth in capital spending is likely.

But from an Australian perspective, JP Morgan sees inflation moving contrary to the global tide, with Q3 CPI data on Wednesday expect to undershoot market expectations, keeping pressure on the RBA to ease the cash rate to 1 per cent next year.

11.11am:Aconex soars as investors cheer

Aconex is heading for its best day in eight months after giving investors something to cheer about in its full-year guidance.

Investors sent the share price shooting higher on robust FY17 guidance.

Shares in the project management software company shot up as much as 13.7 per cent this morning to $5.90, but at just before 11am had cooled to be up 9.6 per cent for the day.

If the stock closes more than 9.2 per cent above yesterday’s finish it’ll be the best one-day gain since February 23.

It’s a warm and fuzzy moment for investors, who might have been sweating after seeing almost 42 per cent wiped off the share price since it peaked on July 26 this year.

In the 18-months prior to July it had stacked on a massive 400 per cent, but investors started to wonder if they had taken it too far, too fast.

Investors are quick to get excited, and while RBC Capital analyst Paul Mason retained an outperform rating on the stock, he said today’s news is “neutral”.

“Overall we see the announcement as relatively neutral for ACX,” Mr Mason said.

“The EBITDA margins implied by the revised guidance are higher than our expectations, however the FY17 revenue outlook is slightly softer even after adjusting for currency impacts.”

11.00am:Tabcorp eyes mid-2017 for Tatts deal

Tabcorp has said its proposed $11.3 billion takeover of rival Tatts will not serve as a distraction through what is expected to be an elongated approvals process, writes Daniel Palmer.

Tabcorp says the takeover of rival Tatts will not serve as a distraction through the approvals process

At the wagering giant’s annual general meeting today, managing director David Attenborough indicated the group was prepared for a thorough review from the Australian Competition and Consumer Commission that is expected to ensure the deal’s completion will wait until mid-2017.

“We expect that relevant approvals will take some time to work through,” he said.

“In the meantime, we remain absolutely focussed on executing our core business strategies.”

Read more

10.46am:Bega Cheese tanks, Aconex surges

Bega Cheese is taking a serious hit this morning as investors panic after the company warned of over supply and potentially lower prices at today’s shareholder meeting.

Bega shares slumped 10.3 per cent at the open to a three-month low of $5.82 — its worst fall since February 1 — as investors flood towards the exit.

Meanwhile, on the positive side of the ledger, Aconex is today’s best performing stock with a 10.7 per cent rise after encouraging investors with a healthy fiscal 2017 earnings estimate.

At 10:30am AEST the S&P/ASX 200 was 0.6 per cent higher at 5447.2 — noticeably higher than the SPI 200 was predicting.

Read:Bega hit as formula deal sours

10.32am:Banks, miners push ASX higher

The Australian sharemarket has recovered the ground lost on Monday in early deals amid broad strength across the big banks and miners, writes Daniel Palmer.

At the 10.15am (AEDT) official market open, the benchmark S&P/ASX 200 index bounced 21 points, or 0.39 per cent, to 5,429.5, while the broader All Ordinaries index gained 20 points, or 0.36 per cent, to 5,509.1.

Read more

10.23am:Aconex rockets on earnings guidance

Market darling Aconex has rocketed 10 per cent in early trade on the release of full-year guidance that pointed to robust margins, writes Daniel Palmer.

The project management software group, which listed in December 2014, said it anticipated revenue to fall in a range of $172-$180 million, up at least 39 per cent on last year’s $123.4m result.

Its projected earnings before interest, tax, depreciation and amortisation are tipped to rise at least 62 per cent to $22-$25m, from $13.6m in fiscal 2016.

Read more

10.13am:What could get investors jumping today

“A better-than-expected manufacturing environment in the US, mega-mergers and a slew of local annual general meetings could have investors jumping today,” CMC chief market strategist Michael McCarthy said this morning.

Strength from the greenback and bond selling overnight could see local stocks outperform.

Strength from the greenback and bond selling overnight could see local stocks outperform the modest rise tipped by the SPI 200, according to Mr McCarthy.

“A stronger USD is cooling commodity markets. Effectively, commodity prices are higher this morning for producers outside the US, despite little change in the USD price of metals and oil. The modest drop in US crude prices may spark further energy sector selling today ahead of tonight’s inventory numbers,” Mr McCarthy said.

BHP Billiton fell 0.5 per cent in the opening ticks this morning — in line with what its ADRs had investors expecting.

“Today investors will hear from Tabcorp, GUD, Sirtex, McMillan Shakespeare, Fortescue and Bega Cheese, among others, at their AGMs. Outlook statements remain crucial in the current uncertain environment, and investors will listen up for any buybacks or potential acquisitions.”

9.55am:Why Bell Potter is bullish on Bellamy’s

Bell Potter isn’t worried about the fact Bellamy’s Australia shares have been flat this year after gaining 940 per cent in 2015 — they’ve slapped a ‘buy’ rating on the stock, saying the global push towards organic food is unlikely to end any time soon.

Analysts expect Bellamy’s shares to hit $16.50 in the next 12 months

Analyst Jonathan Snape could be accused of being late to the party after the wild gains seen last year, today initiating coverage of Bellamy’s with a ‘buy’ and a $13.20 price target, which sits 20 per cent below the consensus 12-month price target of $16.50, according to Bloomberg.

If an investor had thrown money at Bellamy’s at the beginning of 2015 and sold on December 30 that year, he or she would have seen a gain of 938.5 per cent, with shares peaking at $16.50. As outlined above, analysts expect the price to reach that level again in the next 12 months.

But 2016 has been a much quieter year for the organic baby formula company, which has seen shares edge 2.5 per cent lower to last trade at $13.27.

“The global consumption of organic food products reached $US80 billion in 2014 and has grown at an average rate of 14.4 per cent per annum over the last 15 years,” Jonathan Snape said.

“In Australia demand for organic food products has outpaced growth in demand for conventional food products more than fivefold at 15 per cent per annum since 2009. Rising income levels and an increased awareness of food safety and origins is driving the push to organic and this looks unlikely to change in the near term. BAL is highly leveraged to this theme.”

9.41am:Property takes one in four SMSF dollars

Self-managed super funds have made some very interesting — and revealing — changes to their asset allocation as reported by the ATO in the five years to June 2016, writes Rosemary Steinfort.

SMSFs have made some revealing changes to their asset allocation in the past 5 years

The falling allocation to cash is close to 3 per cent and an increase in geared investments classified as “limited recourse borrowings” of over 3 per cent are the most significant moves. Investment in property has remained reasonably static.

But, the data categories of the ATO may not tell the full story regarding where SMSF investors are directing their funds.

Read more

9.15am:Crown arrests rattle $10bn plans

Australia’s casino operators hit new lows on the local bourse yesterday as fresh questions were raised about the impact the arrest in China of 18 staff from the James Packer-backed Crown Resorts will have on a planned $10 billion outlay on new and upgraded local resorts.

James Packer has seen the value of his stake in Crown fall about $700m since the arrests.

Crown led the market carnage, dropping to a one-year low of $10.60. Mr Packer, who owns 48.2­ per cent of Crown, has seen the value of his stake fall about $700 million since the arrests. Crown’s major rival, Star Entertainment Group, hit a nine-month low of $4.97, while SkyCity hit an almost one-year low of $3.52.

The three casino companies have all been expanding on the back of the rise of Chinese tourists visiting Australia but some industry sources have cautioned that boards would now be nervous about the level of planned development if the Crown drama dented the inflow of Chinese tourists.

Sarah-Jane Tasker

Read more

9.05am:Mirvac tips ‘very strong year’

Property developer Mirvac has reaffirmed guidance for the full year despite “mixed” conditions in the residential market across the country as foreign buyers delay settlement and Perth is hit by the mining downturn, writes Daniel Palmer.

MD Susan Lloyd-Hurwitz said the company has seen a solid start to the year.

The diversified property group, which has assets in the office, industrial, retail and residential spaces, said in its first quarter update it still anticipated a “very strong year” with operating earnings of 14-14.4 cents per share despite a few headwinds.

“We have made a solid start to what we are expecting to be a very strong year for Mirvac, with metrics in the investment portfolio remaining high and steady progress made in completing settlements within our residential business,” managing director Susan Lloyd-Hurwitz said.

Read more

8.58am:Broker rating changes

NAB cut to Hold vs Buy — Bell Potter

Bellamy’s rated new Buy; $16.06 target price — Bell Potter

SkyCity raised to Neutral vs Underperform — First NZ Capital

8.52am:What we learned from yesterday’s Q&A

Yesterday we had CMC Markets’ chief strategist Michael McCarthy join us to answer our readers questions on how to maximise gains in a flat market. Some interesting questions and conversations came out of the hour.

Yield investors are grappling with potentially substantial dividend cuts from major banks.

Here’s an example:
Alexandra — How much do you think the market is pricing in dividend cuts to the big banks? Would you be buying dips over the next few weeks?

Michael — Market pricing is flat to — 5% dividends. “Next few weeks” includes US election — won’t be getting too aggressive until the result is known ... One of the challenges for many investors is that they are already heavily exposed to the banks. Despite the banks themselves looking like good value at current prices, an already heavily exposed investor could increase risk by adding to holdings.

Read the comments here

8.36am:ASX to tiptoe higher but traders wary

Australian stocks could edge higher today following a lacklustre start to the week that saw healthcare and energy stocks come under heavy pressure yesterday.

Analysts expectations on the ASX for the next year remain well below 6000 points.

The SPI 200 is pointing to a 0.1 per cent rise, while fair value suggests a slightly stronger gain could be expected — than sort of move would see the local index bounce back from a 0.4 per cent fall yesterday to 5408.5 points.

The S&P/ASX looked a serious threat to close below the 100-day moving average of 5397 points, but managed to regain ground late in the sessions.

Investors could be a little shy today, with yesterday’s intraday fall of 1 per cent, which much worse than the futures had predicted, taking the index to a one-month low of 5377 points.

The consensus 12-month price target among analysts for the ASX 200, according to Bloomberg, has crept up to 5684.4 points, which is 5.1 per cent above the last close.

7.00am:Iron ore at seven-week high

The iron price has pushed to a seven-week high as major miners reduce their shipment forecasts and one investment bank calls a recovery in steel demand, Elizabeth Redman writes.

Iron ore rose 0.5 per cent to $US58.70 a tonne overnight, according to The Steel Index, from $US58.40 in the previous session. The commodity settled at its highest price since September 5, when it was at $US58.80.
Read more

6.50am:Dollar falls further

The Australian dollar has continued to slide against its US counterpart.

At 6.35am (AEDT), the local unit was trading at US76.01 cents, down from US76.25 cents yesterday.

The US dollar hovered near a roughly nine-month high against a basket of major currencies on growing expectations of a Federal Reserve interest rate increase in December.
AAP

6.40am:Wall St gains on deal news

US stocks rose as companies unleashed a fresh round of deals and earnings.

In Europe, French and German stocks also rallied after upbeat economic data, although the British index fell.
Dow Jones
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6.30am:Chinese company in Hilton deal

Chinese conglomerate HNA Group said it plans to buy a roughly 25 per cent stake in Hilton Worldwide Holdings from Blackstone Group LP for $US6.5 billion, the latest move into American real-estate assets by a Chinese firm.
Dow Jones
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