BusinessNow: Live coverage of financial markets and companies, plus analysis and opinion
Traders will now turn their attention to the Fed as the BoJ continues to fight against deflation.
- Japanese stocks rally
- BoJ in surprise step
- Goyder’s pay slashed 50%
- United Petroleum hires CEO, CFO
- Stocks higher ahead of BoJ, Fed
- Nufarm tops forecasts
- BHP CEO’s take-home pay halved
- BHP’s $1bn tax battle
Welcome to the BusinessNow blog for Wednesday, September 21. The Bank of Japan has kept negative rates unchanged, leaving traders to turn their eyes to the US Federal Reserve, which is tomorrow morning (AEST) tipped to leave rates on hold.
8.42pm:OECD gloomy on global growth
Global economic growth will flounder this year and next at rates not seen since the financial crisis as the march of globalisation grinds to a halt, the OECD warns.
Long a motor for the global economy, trade growth is set to lag growth in the broader world economy this year, the Organisation for Economic Cooperation and Development said in an update of its main economic forecasts. “This is well below past norms and implies that globalisation as measured by trade intensity may have stalled,” the Paris-based organisation said. As a result, the OECD estimated the global economy would muster growth of only 2.9 per cent this year, the lowest rate since the global financial crisis of 2008-2009.
The OECD said many global supply chains that add economic value at each stage and are often rooted in China and other east Asian countries were unravelling as China sought to wean its economy off of exports for growth and some firms brought back production to their home countries.
A growing backlash against trade liberalisation as well as recessions in some big commodity-producing countries were adding to the trade slowdown, which the OECD warned could erode already flagging productivity and thus ultimately living standards. Read more.
8.41pm: Gold price rises after BoJ
Gold prices rose modestly in Europe on Wednesday, given some support by the Bank of Japan’s policy revamp, as traders awaited more monetary policy news from the US Federal Reserve.
Gold inched 0.3 per cent higher at $US1,319.39 a troy ounce in late morning trade, with other precious metals also in positive territory.
In volatile trade, gold touched $US1,322.70 after the BOJ stepped up its fight against deflation with a long term interest-rate target, before paring its gains. Monetary stimulus is seen as supportive for gold, used by some investors as a hedge against inflation, but analysts questioned the likely effectiveness of BOJ’s move. Dow Jones.
8.19pm:Asian stocks boosted by BoJ
Japan’s Nikkei Stock Average jumped on Wednesday after the Bank of Japan kept a key rate unchanged and announced it would introduce a 10-year interest-rate target.
The Nikkei Stock Average reversed earlier losses to close 1.9 per cent higher at 16807.62 points. Markets were also broadly higher elsewhere in Asia. Hong Kong’s Hang Seng Index gained 0.6 per cent and Korea’s Kospi ended 0.5 per cent higher.
In Japan, the Topix’s banking subsector closed up 7 per cent, with Mitsubishi UFJ Financial Group ending up 7.4 per cent, Mizuho FG Financial Group adding 6.8 per cent and Sumitomo Mitsui Financial Group closing up 7.3 per cent. Dow Jones.
8.15pm: CommSec’s message to challengers
Michael Bennet
CommSec chief Paul Rayson has a message for fintech start-ups and other companies trying to steal customers.
“Bring it on,” Mr Rayson said when asked about the arrival of new online brokers targeting niches of the market, such as international share trading.
“Competition is good but we’ve got a pretty good international offering, it’s competitive, you can trade lots of markets and you’ve got good support and convenience, so bring it on.”
A range of competitors from international-focused broker Macrovue to the horde of new ‘robo advisers’ has emerged in recent years, picking up slivers of the market. ANZ Bank is also mulling a sale of its online share trading platform. Read more.
7.32pm: A US beef for cattle farmers
US beef producers will be hailing promises of renewed access to the China market, but for Australian exporters already having a tough time it will add to the headwind.
Speaking to US business groups in New York on Tuesday night, Premier Li Keqiang said China would soon allow imports of US beef , mostly banned since 2003 over concerns about bovine spongiform encephalopathy, or “mad cow” disease.
Being locked out of China -- consumer of around 13 per cent of the world’s beef -- is estimated to cost US producers more than $US100 per head of cattle, according to Michael Underhill, chief investment officer at Wisconsin-based Capital Innovations, which has nearly $US1 billion of assets under management.
China will import 825,000 metric tons of beef this year, the US Department of Agriculture forecast in April. That is 24 per cent more than in 2015 and up from just 11,000 tons back in 2002, when the US accounted for 70 per cent of the total.
“The whole export market has really taken off,” said Angus Gidley-Baird, senior analyst of animal proteins at Rabobank. That has created significant opportunities for producers -- these days predominantly from Australia and Brazil. Read more.
6.37pm:European stocks open stronger
European stock markets advanced at the open on Wednesday after the Bank of Japan tweaked its monetary policy easing program, and ahead of the US Federal Reserve’s latest interest rate call.
In initial trade, London’s benchmark FTSE 100 index won 0.6 per cent to stand at 6,874.61 points.
In the eurozone, Frankfurt’s DAX 30 added almost 1.0 per cent in value to 10,496.43 points and the Paris CAC gained nearly 1.2 per cent to 4,439.70.
In Asia, Tokyo soared 1.9 percent after the BoJ adjusted its stimulus plan in a renewed attempt to jumpstart Japanese inflation and the lukewarm economy, providing a healthy start to world markets on what has been dubbed “Big Wednesday”.
“The first of the day’s central bank drama has gone down well, with the Bank of Japan tinkering with their stimulus package much to the delight of the markets,” Spreadex analyst Connor Campbell said.
Later in the day, the US central bank will wind up its own policy meeting. In recent weeks, Fed officials have issued contradictory opinions on the need for a hike in interest rates, sparking volatility on global markets.
While it is not expected to tighten this month, the policy board’s statement will be pored over for clues about its plans for its next meeting in December, or January. AFP
6.28pm:Three things to watch in the Fed’s statement
Not yet. That’s the decision the Federal Reserve is expected to deliver on Wednesday when it announces to the financial world whether it will resume raising interest rates now — or wait until later, perhaps sometime soon.
Most economists say they think the Fed wants more time to evaluate the US economy, measure the risks emanating from abroad and assess whether inflation will soon reach the policymakers’ 2 per cent target rate. In the end, most Fed watchers think the next rate increase won’t come before December.
But no one knows for sure. The biggest question Wednesday is whether the Fed will hint at when it will next raise its key short-term rate — and, if so, how explicitly it will do so.
The answer — or at least the perceived answer — could come from the triple-dose of news the central bank will issue: A policy statement, updated economic forecasts and a news conference by Chair Janet Yellen.
Here are three things to watch for:
Hints of a coming hike?
The Fed raised its key policy rate in December after leaving it at a record low near zero for seven years to help support a struggling economy. No further rate hikes have followed. For months, Fed watchers had speculated that the policymakers were preparing investors for a September rate increase. But that likelihood has faded as recent economic reports have turned out weaker than expected. Read more.
5.23pm:Dollar surges in late trade
The Australian dollar is stronger against the Japanese yen and the US dollar after Japan’s central bank left its key interest rate unchanged and overhauled its monetary policy framework in another attempt to boost the country’s economy. At 5pm (AEST) on Wednesday, the local unit was trading at 77.37 Japanese yen, up from 76.75 yen on Tuesday.
The Australian dollar was higher against the US dollar at 75.65 US cents, up from the previous day’s 75.56 US cents.
The Bank of Japan’s latest policy decision was the key event for global financial markets on Wednesday, and its policy changes are aimed at keeping long-term interest rates from falling, as low rates are putting financial pressure on its banks and damaging business sentiment. AAP
5.11pm:BoJ bumps into QE’s limits?
Stephen Bartholomeusz
The much-anticipated next phase of Bank of Japan’s most unconventional monetary policy has been unveiled. It’s a tweak rather than another aggressive move further into unchartered territory.
In some respects, the Bank of Japan’s decisions are a tacit admission that its supercharged quantitative easing program has become increasingly ineffective and the “unintended consequences’’ for its financial intermediaries increasing damaging.
Ahead of the meeting there had been speculation that the central bank would push its benchmark rate, now at negative 0.1 per cent, further into negative territory. Some thought it might abandon its 2 per cent inflation target, given that Japan is again experiencing deflation. There was even talk of “helicopter money.’’
In the end, after a comprehensive review of its near four-year program of massive purchases of bonds and, more recently, its negative interest rates, the bank chose to finetune its existing programs rather than experiment further. Read more.
4.34pm:BHP warns on more Samarco tailings
Matt Chambers
BHP Billiton has warned that more tailings from the Samarco iron ore mine in Brazil could enter the local river system, with reinforcement work on the burst tailings dam that killed 19 people not scheduled to finish before the coming wet season.
This could lead to more legal claims and fines, on top of more than $70 billion worth of claims that BHP and its 50 per cent joint venture partner Vale are contesting, and a delayed start-up at the mine, BHP said.
Samarco’s tailings dam burst on November 5, killing 14 workers and five local community members as 30 million tonnes of fast moving mining waste hurtled into the valley below.
The sludge all-but levelled the nearby town of Bento Rodriguez and killed fish and contaminated drinking water along the Rio Doce river system. Read more.
4.23pm:Stocks close sharply higher
The Australian sharemarket has ended sharply higher after a modest rise through the morning accelerated in the afternoon thanks to a largely market-friendly policy update from the Bank of Japan.
At the closing bell, the benchmark S&P/ASX 200 index jumped 36 points, or 0.68 per cent, to 5,339.6, while the broader All Ordinaries index climbed 32.1 points, or 0.59 per cent, to 5,429.4.
Ric Spooner, chief market analyst at CMC Markets, said a host of policy tweaks from the BoJ left a positive impression for traders as it moved in line with Europe’s “whatever it takes” approach.
“Keeping QE in place until inflation gets above 2 per cent removes speculation that the program might end before inflation is under control,” he said.
“The bottom line, QE is likely to last longer. The amounts involved will be flexible and aimed at targeting a long-term bond rate.”
The focus now quickly shifts to a policy update from the US Federal Reserve, due out before the start of trade on Thursday.
Traders again noted no lingering effects from Monday’s ASX outage as the bourse operator’s chief executive Dominic Stevens returned to the group’s Sydney headquarters on Wednesday ahead of a report on the glitch being released later this week.
Daniel Palmer
4.14pm:TPG dives 27% in two days
TPG has followed yesterday’s record-breaking 22 per cent slump with another sharp drop today, which has opened the debate about when the shares will be attractive again.
At just before the close TPG shares were down 7 per cent for the day at $8.63 and have now given up 26.8 per cent in two sessions. The stock is on track for its worst week since 2010.
The telco saw around $2 billion wiped off its value yesterday after weaker-than-expected guidance sent investors fleeing for the exit.
But the same bleak picture is certainly not seen by all, with Deutsche Bank opting to dive into coverage of the stock with a ‘buy’ rating following yesterday’s result.
“We initiate coverage on TPM with a Buy rating given the stock is trading 16 per cent below our $11.01 price target and we have a positive outlook for the company,” analysts led by Craig Wong-Pan said.
“While TPG faces margin headwinds as the NBN is rolled out, the company’s extensive fibre network allows it to connect to large apartment buildings and offer fibre-to-the-basement (FTTB) broadband services.”
Read Supratim Adhikari’s report on TPG’s results.
3.45pm:Japanese stocks rally in volatile trade
Japanese stocks have rallied in volatile trade after the Bank of Japan’s decision to modify its policy framework, which included an amendment to its purchases of exchange traded funds (ETFs).
The Nikkei swerved in and out of the red soon after the BoJ policy decision was announced and was last up more than 1.7 per cent, while the Topix is up 2.4 per cent after the central bank said 2.7 trillion of its ETF purchases will be linked to the index.
The BoJ said the maximum amount of each ETF purchase will take into account the total market value of ETFs and coverage of the indexes the ETF tracks.
AAP
3.35pm:BHP CEO pay versus the average worker’s
BHP chief Andrew Mackenzie was paid $6.3 million in the 2015 year, which worked out at 55 times the miner’s median salary that year of $114,000.
Put another way, Mackenzie picked up 81 times the average pay for Australian works of around $80,000 a year.
The relative pay figures are included in the BHP annual report for the first time, following a change in the rules in the US which requires companies to report how much the chief executive gets compared to the average worker.
John Durie
Read more
3.15pm:Stocks push higher on BoJ
Australian shares have pushed to fresh intraday highs on the back of a no-move decision from the Bank of Japan and as traders digest the policy changes issued by the central bank. (For more on this see the post below.)
With a little over an hour remaining in the day’s trade the S&P/ASX 200 was 0.7 per cent higher at 5341.3 points.
Major stocks were seeing gains across the board as positivity flowed back into the market — investors are still anxiously anticipating tomorrow’s Fed news but the market liked what it heard from the Japanese central banks.
CBA was up 0.5 per cent, Westpac gained 0.7 per cent, ANZ lifted 1.8 per cent, NAB increased 1.3 per cent, while Macquarie picked up 1.4 per cent.
Resources stocks also made solid moves, with BHP and Rio Tinto both adding 1.1 per cent as Woodside Petroleum edged 0.2 per cent higher.
2.31pm:BoJ leaves negative rates unchanged
The Bank of Japan has kept rates on hold at -0.1 per cent, and taken an unexpected step by launching a 10-year interest rate target to step up its fight against deflation, following an internal review of existing measures that failed to achieve 2 per cent inflation in a promised two-year time frame.
The central bank said it would start targeting 10-year interest rates, committing to keep them around zero as part of a new policy framework aimed at stoking inflation.
The BoJ also said it would continue quantitative easing until inflation “exceeds” 2 per cent, effectively strengthening its commitment to continue aggressive easing.
Dow Jones
2.15pm:Goyder’s pay packet dives 50%
Wesfarmers chief executive Richard Goyder has suffered a 50 per cent dive in his pay packet while senior executives at the Perth-based conglomerate have lost out a total of $10 million in benefits, bonuses and incentives as the group’s disastrous $2.2 billion in write downs and asset impairments for 2016 demolished their bonus schemes.
However, the boss of Coles, John Durkan, who steers Wesfarmers biggest and most important business did enjoy a higher remuneration payout for 2016 as his supermarket chain continued to outpace and outcompete major rival Woolworths.
Mr Durkan’s pay hit $5.288 million, up from $4.564 million in 2015.
And the managing director of Bunnings, John Gillam, who during the year pumped up his hardware profits to finally kill off Woolworths’ Masters chain only saw a small reduction in his total take home pay but was awarded the biggest slice of his available bonus.
Eli Greenblat
Read more
1.40pm:Buckle up for BoJ
The Bank of Japan could deliver its hotly-anticipated September decision any time in the next couple of hours, and markets remain split on whether the central bank will drop interest rates further into negative territory or not.
Out of 43 economists surveyed by Bloomberg, 23 expect some form of monetary easing to be announced.
“Doing nothing risks a knee-jerk yen-positive response,” senior NAB economist David de Garis said this morning.
“There is market speculation about whether the BoJ will push its policy rate into deeper negative territory to weaken the yen (forecasts range t0 -0.4 per cent), and perhaps coupling this with measures to protect bank net interest margins through the likes of a negative bond market “twist” operation by purchasing shorter-to medium-dated JGBs and selling the super long dated JGBs to increase the yield curve slope.”
The US dollar is currently buying 101.57 Japanese yen and has been drifting lower for around five days as the market awaits today’s news.
1.30pm:United Petroleum hires new CEO, CFO
Petrol retailer and wholesale United Petroleum has hired Gary Brinkworth as its chief executive and Neale O’Connell as chief financial officer as the group prepares for a listing on the Australian Securities Exchange.
The company was founded by Avi Silver and Eddie Hirsch, who are directors of the business, and are in the process of assembling its board, which will include Martin Hudson as chairman and non-executive directors Tim Antonie and John Slack-Smith.
Bridget Carter
Read more
12.52pm:Home building sparks oversupply fears
Home building starts have hit a record high, passing the previous peak in 2003-04 but creating uncertainty for the industry and wider economy, says the Housing Industry Association,
The warning came as Melbourne-based Metricon Homes emerged as Australia’s biggest builder, starting work on well over 4000 homes in the last financial year.
The HIA said construction started on 69,191 new homes in 2015-16, compared to 69,100 in 2003-04.
It was the first time in over a decade that the HIA’s Housing 100 report was dominated by the major eastern markets, with particular growth in Melbourne and regional New South Wales.
Read more
12.35pm:Tatts in exec shake-up
Wagering and gaming giant Tatts Group has announced a shake-up of its executive ranks, with chief financial officer Neale O’Connell to stand down.
Mr O’Connell, who has served in the role for three years, has opted to return from Brisbane to Melbourne to pursue a role in a “non-related industry”, Tatts said.
His departure comes after a total of 12 years with the group, with Tatts given five months to find a replacement before his official departure in February next year.
Daniel Palmer
Read more
12.20pm:Ken Rosewall takes stand in BBY case
Tennis legend Ken Rosewall has taken to the witness stand in an inquiry into the collapse of the stockbroking firm BBY that was owned by his son Glenn.
Mr Rosewall is being queried over his role as a director and investor in BBY from 2008 and his concerns about the business, revealed in email exchanges obtained by the liquidator.
He told the NSW Supreme Court that by 2013 he had “reached the end of the road’’ in putting more money into the firm and had concerns about the financial performance ofhte company.
But the court heard that BBY needed $3m in mid 2013 and as well as loaning $500,000 to BBY he advanced $3m to his son, who then provided $2.5 million as a loan to the firm.
Andrew White
Read more
12.05pm:Rate cuts deliver above-trend growth
Westpac’s leading index is pointing to above-trend growth for the first time in 15 months in the latest sign interest rate cuts are starting to filter through the local economy.
The leading index, which highlights the likely pace of growth relative to trend, lifted from -0.01 per cent in July to +0.2 per cent in August.
“The positive index growth rate follows 15 consecutive months where growth has been below trend,” Westpac chief economist Bill Evans said.
Daniel Palmer
Read more
11.32am:Autosports Group IPO delayed
The initial public offering of upmarket car dealer Autosports Group has been pushed out to the end of October, according to market sources.
Initially a raise of over $150 million was planned for the end of this month, although it is understood that time frame had been tweaked to early October.
There has been strong investor support for the luxury car dealer, which owns 17 new car dealerships and two used car outlets.
UBS and Macquarie are acting as joint lead managers to the deal, while Luminis Partners were drafted in as financial advisers.
Gretchen Friemann
11.15am:Charter Hall snaps up half of Coles HQ
Charter Hall has acquired 50 per cent of the building that currently houses the headquarters of supermarket giant Coles, Daniel Palmer writes.
The ASX-listed group said it paid $140.5 million to Investa Office Fund for the stake, noting Coles had recently signed a long-term lease tying itself to the Melbourne property until 2030.
The remaining 50 per cent of the building is owned by a private group, Charter Hall said.
Read more
10.59am:Yen, then Yellen: which will impact more?
The market is playing it cool ahead of this afternoon’s Bank of Japan announcement and tomorrow’s Fed decision, but the timing of the announcements could make for an interesting few days.
“Traders are ready for any possibility with today’s BoJ decision,” CMC Markets chief analyst Ric Spooner said.
“However, one possibility is that the immediate market response might be complicated by timing issues. The decision itself will be followed by Mr Kuroda’s press conference some time later. This may come after the Australian stock market closes,” Mr Spooner said.
“The position is further complicated for traders by the Fed decision due at 4am tomorrow AEST.
“For example, yen bullishness based on any disappointment over the BoJ’s failure to provide more stimulus might be outweighed by a clear move towards monetary tightening by the Fed.”
10.46am:Is the gold party over?
Five of the top 20 performing ASX 200 stocks of 2016 so far are gold miners.
With wild volatility quaking the global marketplace caused by shock events like Brexit and the uncertainty surrounding the Fed’s plan to raise interest rates, cautious investors have pushed the price of gold higher, and local gold miners have benefited.
St Barbara has rocketed 112 per cent since the year began, while Evolution, Newcrest, Regis Resources and Northern Star all gained between 51 per cent and 77 per cent, while the ASX has returned just 0.15 per cent.
Despite that ripper run, analysts at Ord Minnett warn gold price momentum will ease and, if investors insist on sticking with gold miners, mid-caps are the way to go.
“Overall, we recommend investors to be underweight precious metals, but for those seeking gold exposure we would recommend a basket of mid-cap stocks,” Ord Minnett analysts said, adding that downside risks are showing to consensus earnings estimates.
“Multiples are likely to continue to de-rate as gold price momentum stalls.
“Fiscal 2017 EV/EBITDA [enterprise value/earnings before interest, tax, depreciation and amortisation] valuation multiples for ASX gold equities have come off ~19 per cent since July vs a 3 per cent decline in gold prices.
“Improved gold price momentum is required to sustain lofty valuation multiples, in our view, with NPV valuations implying a much higher gold price than spot on our forecasts,” the analysts said.
Newcrest, the largest in the sector, is Ord Minnett’s least favourite gold stock at the moment, with a ‘lighten’ recommendation and 12-month price target of $19 compared with its current price of $21.29.
Gold miners remain attractive to conservative investors this year as central bank concerns remain and the outcome of the US presidential election continues to throw difficult questions to investors.
But as far as Ord Minnett seems to be concerned, the gold party is more or less over.
10.25am:Stocks higher at open
The Australian sharemarket has enjoyed a modest rise at the open as traders brace for updates from the Bank of Japan and US Federal Reserve across the next 24 hours.
At the 10.15am (AEST) official market open, the benchmark S&P/ASX 200 index lifted 11.5 points, or 0.22 per cent, to 5,315.1, while the broader All Ordinaries index added 11.8 points, or 0.22 per cent, to 5,409.1.
Traders were seeing no lingering effects from Monday’s ASX outage as the bourse operator’s chief executive Dominic Stevens returned to the group’s Sydney office today ahead of a report on the glitch being released later this week.
In the meantime, investors have every reason to be nervous leading into crucial updates from central bankers given monetary policy has proven so crucial in the run-up in share valuations since the GFC.
Daniel Palmer
10.12am:Fonterra delivers 2nd price hike in month
A sudden surge in confidence around global dairy prices has seen Fonterra offer its New Zealand suppliers a second price hike in a month and stirred hopes for step-ups in the farmgate prices offered to Australian farmers.
In an update to the market this morning, Fonterra said it had increased its forecast farmgate milk price in New Zealand by NZ50c to $NZ5.25 ($5.08) per kilogram of milk solids.
The announcement follows a similarly sized price hike on August 25 and comes on the heels of a price rise from Australian giant Murray Goulburn last week.
Daniel Palmer
10.00am:Nufarm tops forecasts
Agricultural chemical group Nufarm has comfortably topped market forecasts despite seeing its profits slide by more than a third, writes Daniel Palmer.
For the year to July 31, the ASX-listed company booked a net profit of $27.5 million, down 36.3 per cent on the prior year due to previously flagged restructuring costs of $81.4m.
The numbers far outstripped projections from analysts for a swing to a loss of $4.2m.
Read more
9.45am:BoJ’s spree is a headache for the RBA
From David Uren’s column today:
The Bank of Japan’s trillion-dollar determination to kickstart the Asian nation’s economy is disrupting Australia’s short-term money market, according to the Reserve Bank, with economists concerned that today’s meeting of Japan’s central bank could make things worse.
Japanese investors are using Australia’s short-term secured lending market in a hedging strategy that effectively swaps Australian government bonds for Japanese government bonds, which are in strong demand under the Bank of Japan’s massive quantitative easing program.
In the process, they are distorting rates in the “repo” market, which is the market used by the Reserve Bank to set the cash rate and is also the key market that provides liquidity to trade in government bonds.
Read more
9.25am:BHP CEO’s take-home pay slashed
For the first time in at least a decade the chief executive of BHP Billiton has not received any bonus payments, Daniel Palmer writes.
In the miner’s annual report today it disclosed current managing director Andrew Mackenzie took home $US2.24 million in FY16, half his remuneration of the prior year.
Mr Mackenzie received neither short- nor long-term incentive payments through a tumultuous year that saw more than a quarter of the group’s valuation wiped out as depressed commodity prices and a tragic dam collapse at its Samarco JV in Brazil took a toll.
Read more
9.10am:Kathmandu sees profit jump
New Zealand-based retailer Kathmandu has reported a jump in profit as it looks to expand further internationally, Elizabeth Redman writes.
The adventure wear specialist posted a net profit of $NZ33.5 million in the year to July 31, a 64.2 per cent lift compared to the previous corresponding period.
Kathmandu’s chief executive Xavier Simonet attributed the increase to efforts to keep costs down and focus on margins.
“Sales growth was achieved at higher gross margins as a result of product newness and careful management of promotional activity,” Mr Simonet said.
Revenue at the retailer, which is dual-listed in Australia and New Zealand, edged up 4 per cent to $NZ425.6m in the year.
Read more
9.00am:Caution reigns ahead of BoJ, Fed
Investors look set to remain mostly on the sidelines today as the month’s most important economic event creeps closer.
The big news of the day is coming from BHP, which says it is “pretty confident” of its position in an emerging $1 billion tax battle over its controversial Singaporean marketing hub.
The miner’s ADRs are pointing to a flat open but we’ll see how badly the market reacts to today’s news.
The US Federal Reserve will give the global market some much-needed clarity on Thursday morning (AEST) and local stocks have been flat for some time in anticipation.
Few expect a rate hike from Janet Yellen and the board but the Fed’s language will be picked apart for any hints on the timing of a move.
Eyes will also be all over the Bank of Japan today, with many in the market expecting the central bank to lower already negative interest rates.
The local SPI200 is pointing to a 0.2 per cent fall, while fair value suggests a flat start is more likely.
The ASX 200 has gained less than 0.2 per cent over the last two sessions, including Monday’s problematic day for the market operator, which leaves traders asking if we might be on the way to a sixth negative week in a row on the local market.
8.45am:BHP’s $1 billion tax battle
BHP Billiton says it is ready to fight for the legitimacy of its controversial Singapore marketing hub in court as the tax bill for the operation climbs above $1 billion, Ben Butler writes.
The mining giant has received fresh tax bills for the years 2009 to 2013, on top of existing assessments covering 2003 to 2008, BHP said in an annual tax transparency report released today.
The dispute is over the price at which BHP in Australia sells its products to the Singaporean marketing hub.
Read more
7.10am:Australian market set to open lower
The Australian market looks set to open slightly lower after Wall Street closed little changed ahead of interest rate decisions from the Federal Reserve and the Bank of Japan.
At 6.45am (AEST), the share price index was down eight points at 5,282.
Locally, the Westpac-Melbourne Institute Leading Indexes of Economic Activity is due out. In equities news, Kathmandu is expected to post full-year results, while BHP Billiton is slated to release its annual report.
In Australia, the market yesterday closed slightly higher as investors wait for crucial central bank interest rate decisions from Japan and the US. The benchmark S & P/ASX200 index was up 8.8 points, or 0.17 per cent, at 5,303.6 points.
The broader All Ordinaries index was up 3.6 points, or 0.07 per cent, at 5,397.3 points.
AAP
7.05am:Iron ore price hovers above $US55
The iron ore price is holding steady, a whisker above the price estimate provided in the Federal Budget, as Macquarie analysts upgraded the outlook for mining giant BHP Billiton, Elizabeth Redman writes.
Iron ore settled at $US55.30 a tonne overnight, according to The Steel Index, unchanged from the previous session.
Read more
6.55am: Dollar steady
The Australian dollar is unchanged against the greenback with the US dollar steady as investors await decisions from the Federal Reserve and the Bank of Japan.
At 6.35am (AEST), the local unit was trading at US75.56 cents, unchanged from yesterday.
AAP
6.50am:Markets expect steady Fed
The Federal Reserve opened a two-day monetary policy meeting with widespread expectation that it will keep interest rates locked at an ultra-low level due to still-tepid economic growth.
Dow Jones
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6.40am:Wall St steady ahead of Fed
US stocks and government-bond prices were little changed ahead of looming decisions from major central banks.
The Dow Jones Industrial Average edged up 9.79 points, or 0.05 per cent, to 18129.96. The S&P 500 added 0.03 per cent and the Nasdaq Composite gained 0.1 per cent.
Dow Jones
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