Trading Day blog: live markets coverage; ASX lifts on energy, banks, plus analysis and opinion
Local shares post gains on bout of bank bargain hunting, while crude ticks higher alongside energy stocks.
Welcome to the Trading Day blog for Friday, December 1.
Samantha Woodhill 4.45pm: Energy stocks drive ASX gains
The local sharemarket finished the session slightly higher as energy stocks led gains and banks ended in positive territory after rebounding early in the session.
At the close of trade, the benchmark S & P/ASX200 was up 19.909 points, or 0.33 per cent, at 5989.801 points. The broader All Ordinaries index was up 18.295 points, or 0.30 per cent, at 6075.5 points.
CMC Markets chief market analyst Michael McCarthy said strength in energy stocks came amid light trading volumes, and despite the fact that the oil price didn’t rally overnight on back of the OPEC news.
“Local investors appear to have taken the agreement that OPEC reached as a real positive for oil and the energy sector, leading the market higher,” he said.
Woodside Petroleum stepped up 1.23 per cent to $31.38 while Origin Energy jumped 1.57 per cent to $9.07. Santos gained 1.18 per cent to $5.17.
Among the miners, BHP Billiton rose 1.03 per cent to $27.58 while Rio Tinto swelled 0.31 per cent to $71.17.
In financials, NAB grew 0.10 per cent to $29.62, Westpac edged 0.29 per cent higher to $31.56 and ANZ ticked up 0.56 per cent to $28.62. Commonwealth Bank bucked the trend, sliding 0.33 per cent to $79.17.
“It appears investors are taking a view that the Royal Commission will stall any of the reforms that were in front of the industry,” Mr McCarthy said.
“The other factor could be that now that the government is running the inquiry, the terms of reference will be dealing with problems in the sector rather than some of the loopy proposals that were put forward through the course of the week.”
3.20pm: Bitcoin a ‘threat to stability’
Digital currencies like bitcoin could pose a threat to financial stability as they gain wider use, a chief US Federal Reserve banking oversight official warned.
The remarks from newly installed Fed Vice Chairman for Supervision Randal Quarles came as the cryptocurrency took a vertiginous dive after skyrocketing earlier in the week to more than 10 times its value at the start of the year.
Bitcoin is also increasingly being embraced by Wall Street, with plans reportedly afoot at markets including Nasdaq and Chicago’s Mercantile Exchange and Board of Options Exchange to offer trading in the currency’s futures.
Decentralised digital currencies like bitcoin operate as a payments system with no central bank and are exchanged between sellers and buyers using cryptography — read more
Note: Bitcoin last bought
2.38pm: Last week of spring by the numbers
Prashant Mehra writes:
MONDAY: 0.5 per cent — The fall in Sydney home values over the past month. Sydney’s median house price is now $945,000 and unit price $712,500, figures from property analytics group CoreLogic show.
TUESDAY: 5,589 MW — The amount of generation capacity from large scale renewable energy projects that has been formally announced by November 1, out of a 6,000 MW a target. As a result, Australia looks set to achieve its 2020 renewable energy target for generating 23.5 per cent of the country’s power from renewables, Clean Energy Regulator executive general manager Mark Williamson says.
WEDNESDAY: $164,000 — What insurer Youi will pay for charging people for policies they hadn’t agreed to buy. This includes a $150,000 payment to an advocacy group for people in financial stress and another $14,000 spread over 102 consumers, after the Australian Securities and Investments Commission raised concerns.
HURSDAY: $1.4 billion — The price paid by poker machine supplier Aristocrat Leisure for acquiring Seattle-based social gaming company Big Fish Games. The buy will make Aristocrat’s digital business the second biggest provider of social casino games by revenue globally.
FRIDAY: $600 million — The likely hit on Telstra’s FY18 earnings, after NBN Co announced the temporary suspension of the national broadband network rollout. The telco giant now expects full-year earnings to be between $10.1 billion and $10.6 billion, while revenue is also expected to be lower, by $700 million.
AAP
Bridget Carter 2.08pm: Permira shies in I-Med race
British based private equity firm Permira is believed to have fallen away in the competition for I-Med, with the contest for the radiology provider that may sell for as much as $1.4 billion now thought to be a shootout between Chinese bidders.
Permira, advised by Goldman Sachs, was believed to be the last private equity firm left in the competition where final bids were due last Friday.
More to come from DataRoom
1.39pm: ASX shrinks bargain bank gains
Local shares shrink strong opening gains as a bout of bank bargain hunting loses traction, while energy stocks streak out ahead as crude takes a leg higher in Asia trade.
The S & P/ASX200 remains 0.3 per cent higher at 5985 after earlier rising to 0.6 per cent.
The Big Four all track the index lower, CBA the only major in the red by 0.3 per cent.
“It’s interesting to note too that CBA, which was [also] the hardest hit yesterday is lagging,” says CMC chief markets strategist Michael McCarthy.
”While there are valuation arguments here as well, it does appear that investors are selecting winners and losers.”
Telstra remains 0.6 per cent down on $3.42 after lowering its near-term earnings forecast and leaving its 22cps FY18 dividend guidance intact.
Energy names hitch a ride north as underlying commodity crude takes a leg higher in Asia trade, benchmarks around 0.5 per cent higher with Brent finding support over $US60/barrel after OPEC reached an accord on production cuts for the next 12 months.
Meanwhile, the Australian dollar is little changed on $US75.76 cents ahead of the RBA’s December rate call Tuesday next week.
Samantha Woodhill 1.18pm: GetSwift doubles on Amazon deal
Shares in software company GetSwift more than doubled to $4.36 in early trade after the company announced this morning that it has signed an agreement with Amazon.
In a brief statement to the ASX, GetSwift said the deal has been signed but that due to the sensitive nature of the agreement, no further information could be provided,.
“Due to the terms and conditions of the agreement and the highly sensitive nature, no further information will be provided by the company other than to comply with regulatory requirements for disclosure,” the statement said.
GetSwift is a SaaS solution company that uses a proprietary algorithm to optimise delivery routes, and automates the delivery dispatch process, providing real time tracking.
GWS has since cooled and trade has been suspended with the shares 84 per cent higher than yesterday’s close on $3.60.
Matt Chambers 12.56pm: Shell deal opens up gas field
Shell has struck a long-awaited deal to develop the huge Queensland coal seam gas resources in its Arrow joint venture with PetroChina, agreeing to buy 5 trillion cubic feet of gas, worth about $30 billion at current prices, for its Queensland Curtis LNG operation.
Shell chairman Zoe Yujnovich said the 27-year deal paved the way for a staged development of Arrow’s vast CSG fields, which until now have been the biggest gas resource on the east coast without a path to market, after plans for what would have been a fourth Queensland LNG plant were abandoned in 2012.
12.23pm: Hayne to lead bank Royal Comission
Updated:
Former High Court judge Kenneth Hayne will lead the royal commission into misconduct into Australia’s financial sector.
The Turnbull government on Friday recommended Mr Hayne be appointed commissioner to oversee the 12-month inquiry into banks, insurers, financial service providers and superannuation funds.
“He is renowned for his brilliant mind, his forensic skill, and his deep sense of justice,” Prime Minister Malcolm Turnbull, Treasurer Scott Morrison and Attorney-General George Brandis said in a joint statement.
AAP
12.13pm: Japan’s prices lacking animation
Japan’s consumer prices rose for the 10th straight month in October, government data showed Friday, but inflation was still far from the target seen as crucial to revive the world’s third-largest economy.
The core inflation rate was 0.8 per cent year-on-year in October, according to data published by the internal affairs ministry, far below the two-percent target set by the Bank of Japan (BoJ).
When the volatile prices for fresh food and energy were stripped out, prices rose by even less — 0.2 per cent, the ministry said.
Japan’s economy has battled deflation for many years and the BoJ’s ultra-loose monetary policy appears to be having limited impact.
AFP
11.43am: Investors buy bank dips, lift ASX
Local shares book early gains and are on track to recover all of yesterday’s losses led by banks after the Turnbull government’s backflip over an inquiry into financial services.
The S & P/ASX200 index was last up 0.5 per cent on 6001.2.
Big Four bank shares all trade in the black after US counterparts rose on fresh tax stimulus hope, Westpac best off trading 1.1 per cent higher.
Energy is the best performing sector after OPEC reached an accord to extend production cuts for the next 12 months.
Eli Greenblat 11.38am: Lew slams passive Myer investors
Retail billionaire Solomon Lew has ramped up his campaign against large institutional investors who failed to support him in his bid to block the election of three directors to the Myer board last week, as well as vote down other resolutions at the department store’s annual general meeting, slamming them as “passive” when they are supposed to be managing “other people’s money”.
Addressing his shareholders at the Premier Investments annual general meeting in Melbourne this morning, Mr Lew also launched a blistering attack on what he termed “10 years of continuous government instability, uncertainty and short-term decision making” where sound economic policy has lost out to political tactics — read more
PMV last down 0.6 per cent on $14.32
11.30am: The Trading Day ahead
Join the conversation with our Trading Day experts for breaking news and analysis in financial markets here and on Sky News Business (Ch: 602)
NOW: Rudi Filapek-Vandyck — Editor, FNArena
11.30am: Simon Segal — Dealbook
12.00pm: Howard Coleman — Team Invest
12.15pm: Peter Burn — AI Group
12.30pm: Janu Chain — Senior Economist, St George
(All times in AEST)
Glenda Korporaal 10.43am: Super integral part of inquiry: O’Dwyer
Financial Services Minister Kelly O’Dwyer has defended the inclusion of superannuation in the Royal Commission into the financial services announced yesterday.
“There is no compelling case to carve out such a significant part of our financial system from this inquiry,” Ms O’Dwyer said in a speech this morning to the annual conference of the Association of Superannuation Funds of Australia.
“Especially since the superannuation system operates under a compulsory model.”
“The entire financial services industry must be able to stand up to scrutiny,” she said.
“This is what Australians expect and rightly so.”
Ms O’Dwyer was speaking after superannuation industry leaders including ASFA chief executive Martin Fahy questioned why the $2.5 trillion superannuation industry was included in an inquiry which had resulted from some poor behaviour in the banking industry.
Supratim Adhikari 10.18am: Telstra halts HFC sales
Telstra is about to shut down selling NBN plans over the HFC network within days, with the telco’s boss saying that it’s in the best interest of end users that fixing the network starts as quickly as possible.
NBN Co has set a deadline of December 11 for all sales to stop but Mr Penn said Telstra was working with the company to stop selling services immediately.
He added that the revised guidance was needed to mitigate the impact of NBN Co’s plan to delay the rollout.
According to Mr Penn, the overall health of Telstra’s business for FY2018 was stable.
“Our operating outlook guidance remains unchanged,” Mr Penn said on Friday morning.
Elizabeth Redman 10.07am: Curbs hit Sydney house prices
Sydney’s housing market fell more than any other capital city last month and was the second weakest market this quarter after Darwin, as clamps on lending take effect.
Sydney home values fell 0.7 per cent during November and 1.3 per cent over the quarter, according to the CoreLogic November home value index.
The falls came in contrast to the Melbourne market where values are still rising albeit at a more moderate pace, up 0.5 per cent over the month and 1.9 per cent this quarter.
Regulatory clamps on lending announced this March have been cooling the Sydney market given its significant investor activity, as investors find it harder to get interest only loans and loans with small deposits.
9.50am: ASX banks, energy to shift dial
Futures trade tips the ASX200 index to rise 0.3pc to 6005 at the open, news from across the globe and at home to drive heavyweight financials, while the energy space looks to carry over momentum from a fresh OPEC cut accord.
Wall Street banks rallied strongly overnight, ousted as the market’s pick of sectors to benefit from the Republican’s proposed tax plan that found new traction after Senator John McCain threw support behind the bill.
However, local sector momentum may be subdued as investors remain divided over the extent of a cautious market reaction to the Turnbull government’s backflip over a Royal Commission into the sector.
Meanwhile OPEC agreed to a year-long extension of production cuts despite fractures in key relation Russia’s resolve, energy stocks poised to follow on from a positive lead from US counterparts despite a slight pullback in crude prices overnight.
Yield hungry investors will keenly watch Telstra shares at the open the company held its FY18 dividend guidance but cut its earnings forecast for the period after the stock hit a fresh five-year low earlier this week in the wake of NBN rollout setbacks.
Index last 5976.7
9.23am: Billabong lobbed takeover offer
Billabong has received an indicative, non-binding proposal from Boardriders at $1.00/share.
Oaktree Capital has a majority interest in Boardriders and a 19 per cent stake in Billabong.
The offer is conditional subject to a number of conditions including due diligence and financing.
Billabong has appointed Goldman Sachs as its financial adviser and Allens as its legal
adviser.
BBG last 78 cents
9.20am: ASIC bans Bell Potter trader
ASIC has banned Bell Potter trader Damian Rodr from providing financial services for four years, alleging Mr Rodr entered bids for DirectMoney (DM1) shares through Bell Potter’s house account with the dominant purpose of supporting its share price after managing and underwriting a capital raising by the company in 2015.
9.03am: ACCC won’t appeal Tabcorp-Tatts bid
The ACCC say it will not apply for judicial review of the Australian Competition Tribunal’s determination to grant conditional authorisation to Tabcorp for the proposed acquisition of Tatts Group.
TAH last $4.85, TTS last $4.32
John Durie 8.56am: Politics prevail over policy
Politics has triumphed over good policy once again, with the entire financial system now under a royal commission inquiry for the next 12 months.
Facing defeat on the floor of the House, Malcolm Turnbull made a politically smart decision to press ahead with the inquiry and get the issue off the table.
He will be justifiably slammed for his monumental backflip on the issue and just last week Finance Minister Mathias Cormann said there was “no public policy benefit” from an inquiry — read more
Read: Time not on inquiry’s side, writes Richard Gluyas
Read: Uncertainty comes with a cost, writes Adam Creighton
8.43am: Quicksilver eyes Billabong drop in
Surf wear label Quiksilver is believed to be planning a takeover bid for its smaller rival Billabong, offering $1 a share for the listed company that was once a multibillion-dollar clothing empire.
Billabong is understood to have Goldman Sachs as its defence adviser, and the takeover speculation comes as the pipeline of deals appears to picking up for bankers.
Aristocrat Leisure announced yesterday its Big Fish Games acquisition for $US990m ($1.3bn) in a Term Loan B market-funded deal with Citi as a financier along with advisers Goldman Sachs and UBS — read more from DataRoom
BBG last $18.44
8.30am: OPEC pledges cuts
Oil producer nations have agreed to keep a lid on output for all of next year, despite Russia starting to get cold feet and tensions between Iran and Saudi Arabia in the Middle East.
Twenty-four countries decided to maintain production curbs of 1.8 million barrels per day until December 31, 2018, the energy minister of OPEC kingpin Saudi Arabia said.
“I am please to announce that the decision has been unanimous. It’s a solid decision ... which is to roll over and extend the deal through the end of December 2018,” Khaled al-Falih told a news conference in Vienna.
The agreement among the 14 members of the Organization of the Petroleum Exporting Countries and 10 others including Russia was first struck a year ago and was already extended once until March 31, 2018.
The aim is to reduce a global excess in supply that has pushed oil prices lower and left a huge hole in the finances of producer nations, despite making life easier for buyers of crude.
So far, it has worked, helping oil prices climb from less than $US30 in early 2016 to around $60 now and reducing bloated inventories to more normal levels.
Overnight oil prices dipped, however, giving back some of their recent gains, with Brent Crude off 23 cents at $US62.30 and fellow benchmark West Texas Intermediate down 26 cents at $US57.04.
AFP
Michael Roddan 8.23am: Heat on PM to broaden inquiry
Malcolm Turnbull’s launch of a banking royal commission has failed to quell discontent about the nation’s financial sector, with the shock announcement sparking a race to broaden the inquiry’s terms of reference and to drag other sectors into the examination.
The proposed year-long royal commission will cover the banking, superannuation and financial services industries, unregulated non-bank lenders and the effectiveness of financial regulators.
8.15am: Telstra keeps FY18 dividend guidance
Telstra has kept its dividend guidance for FY18 at 22 cents-per-share and lowered its forecasted range for profit ex-financial income over the same period by $700m to between $27.6bn to $29.5bn.
The telco now also expects marginally lower earnings (EBITDA) on the same basis in a range between $10.1bn-$10.6bn.
The announcement comes shortly after the NBN Co announced it would be delaying the rollout of hybrid copper (HCF) household connections to the NBN network earlier this week following uproar over connection speeds, a move Telstra backed but warned would be a material impact on the timing of its NBN revenue.
TLS last $3.44
8.05am: Wall St surges
The Dow Jones Industrial Average surged more than 300 points to finish above 24000 for the first time, as hopes grew for a tax bill.
Shares of financial firms led that major indexes higher, as investors closely watched Republicans’ progress on the tax overhaul plan.
Analysts say banks are among the stocks that would benefit from the plan’s proposed corporate tax cut since they tend to pay a relatively high tax rate. Senate Republicans voted to begin debating the bill yesterday and a final vote in the Senate could come as early as today (AEDT).
“Between tax reform and the economy strengthening, the fundamentals look good,” said Paul Brigandi, head of trading at Direxion Investments. “Markets are expecting the tax bill and are optimistic about what that means for the economy.”
At the close, the Dow industrials gained 332 points, or 1.4 per cent, to 24273. The S & P 500 added 0.8 per cent, while the Nasdaq Composite rose 0.7 per cent. Both the Dow industrials and the S & P 500 finished with their eighth consecutive month of gains.
Stocks have rallied to new heights throughout the year, as steady economic expansion in the US and overseas, as well as strong corporate earnings, have helped support rising valuations. The Dow has hit five thousand-point milestones this year, the latest one coming 30 trading sessions since it closed above 23000.
Energy companies were also trading higher, as crude-oil prices rose slightly. Oil prices, which have been rising recently, got further support after the Organization of the Petroleum Exporting Countries agreed in principle on an extension to their deal to cut crude production.
Dow Jones Newswires
7.35am: ASX to follow US higher
The Australian share market looks set to open higher after upbeat sentiment over tax reform legislation passing the Senate pushes Wall Street’s Dow Jones through 24000 points for the first time.
At 7am (AEDT), the share price futures index was up 19 points, or 0.32 per cent, at 6,005.
In the US, Wall Street indexes have rallied on increasing indications the Republican party’s push for a US tax overhaul may get enough support to pass. Republican US Senator John McCain said he would back the tax bill, citing a boost to the economy, even though it was “far from perfect”. Investors cheered McCain’s support as his vote against Republican Obamacare repeal efforts was key to its collapse earlier this year.
A reduction in the US corporate tax rate to 25 per cent could boost S & P 500 earnings by 6.5 per cent, UBS US equity strategist Keith Parker estimated.
At 7.23am (AEDT) the Dow Jones Industrial Average was up 1.22 per cent — at 24,231.87.
The S & P 500 had gained 0.62 per cent and the Nasdaq Composite had added 0.57 per cent.
Locally, in economic news today, property analytics business CoreLogic is slated to release its capital city house prices survey for November and the Ai Group’s performance of manufacturing (PMI) index for November is also due out.
In equities news, Premier Investments has its annual general meeting.
Meanwhile, the Association of Superannuation Funds of Australia’s annual conference wraps up.
The Australian market yesterday closed lower following the shock announcement of a royal commission into the finance industry, with banks and insurers hit by the news — Commonwealth Bank and ANZ recording the biggest falls. The benchmark S & P/ASX200 index fell 41.2 points, or 0.69 per cent, to 5,969.9 points The broader All Ordinaries index closed down 38.9 points, or 0.64 per cent, at 6,057.2 points.
AAP
7.00am: Dollar drops again
The Australian dollar has again fallen against its US counterpart after yesterday recouping some of its previous day’s losses.
At 6.35am (AEDT), the Australian dollar was worth US75.63 cents, down from US75.90 cents yesterday.
Westpac’s Imre Speizer says sentiment has been upbeat in the US with wall Street’s S & P500 up more than one per cent to a fresh record high amid optimism that the proposed tax reform could soon pass the Senate.
” US 10-year treasury yields rose from 2.36 per cent to 2.44 per cent — a one- month high, and two-year yields rose from 1.76 per cent to 1.79 per cent,” he said in a morning note.
“Fed fund futures yields continued to price the chance of a December rate hike at 100 per cent.
“Economic data released was OK but had little impact. Rather, it appeared to be a headline that previously undecided senator McCain would now vote yes for the tax reform bill which moved bond yields.”
However, the US dollar slipped slightly while the Australian dollar ranged sideways and the euro lifted on Brexit negotiations improvement — but sterling was the standout.
Mr Speizer said the local currency today likely would continue to be rangebound “between 0.7530 and 0.7645”.
AAP
6.55am: McCain support bolsters tax hopes
Senator John McCain said he would support a $US1.4 trillion tax cut that Republicans are advancing in the Senate, pushing the plan closer to passage though intense jockeying is still playing out among politicians as a critical vote on the Senate floor nears in the hours ahead.
The support of the Arizona Republican, who helped defeat GOP efforts to repeal the Affordable Care Act this year, gives Republicans momentum. Party leaders want to pass the bill this week.
“After careful thought and consideration, I have decided to support the Senate tax reform bill,” Mr McCain said in a statement. “I believe this legislation, though far from perfect, would enhance American competitiveness, boost the economy, and provide long-overdue tax relief for middle class families.”
Republicans need 50 votes, with Vice President Mike Pence breaking a possible tie. The party controls 52 seats, compared with 48 for Democrats. No Democrat is expected to vote for the bill, meaning Republicans can afford to lose only two votes.
Dow Jones
6.50am: Wall St lifts amid tax plan hopes
US stocks rose overnight, sending the Dow Jones Industrial Average above 24000 for the first time.
In US afternoon trade the Dow industrials gained 308 points, or 1.3 per cent, to 24247. The S & P 500 added 1 per cent, while the Nasdaq Composite rose 0.9 per cent.
Both the Dow industrials and the S & P 500 were on pace for their eighth consecutive month of gains.
Australian stocks are set to follow the US higher. At 6.50am (AEDT) the SPI futures index was up 20 points.
US stocks have rallied to new heights throughout the year, as steady economic expansion in the US and overseas, as well as strong corporate earnings have helped support rising valuations. The Dow has hit five thousand-point milestones this year, the latest one coming 30 trading sessions since it closed above 23000.
Shares of financial firms led major indexes higher, as investors closely watched Republicans’ progress on the tax overhaul plan. Analysts say banks are among the stocks that would benefit from the plan’s proposed corporate tax cut since they tend to pay a relatively high tax rate.
“Between tax reform and the economy strengthening, the fundamentals look good,” said Paul Brigandi, head of trading at Direxion Investments. “Markets are expecting the tax bill and are optimistic about what that means for the economy.”
Dow Jones
6.40am: Eurozone stocks slide
Eurozone markets slipped as investors were torn between Wall Street euphoria over renewed optimism that US tax cuts will clear a key legislative hurdle and concerns awaiting OPEC’s next move.
Oil prices were mixed ahead of the decision from a meeting in Vienna of 24 producing nations on crude output levels.
However, Bitcoin traded at $US9,309.25 according to Bloomberg data — well down on a record $US11,434 reached yesterday.
The pound extended its climb against the dollar following reports British and European Union negotiators were close to a divorce settlement deal over Brexit.
That didn’t help London’s benchmark FTSE 100 equities index, which closed down 0.9 per cent. Many companies listed there make much of their earnings abroad, and a high price for the pound depresses profits.
A strengthening euro affected main eurozone markets with Frankfurt’s DAX 30 sliding 0.29 per cent while the Paris CAC 40 dropped 0.47 per cent.
Europe’s economic recovery is gathering steam, with eurozone unemployment falling to the lowest level since January 2009 and inflation picking up, official figures showed.
The EU’s official statistics agency announced that the jobless rate in the single currency area fell to 8.8 per cent in October, with inflation rising to 1.5 per cent.
AFP
ASX braces after US falls on Trump tariff dance; Cyclone Alfred looms
'Erratic' Cyclone Alfred's growing risk. Equity markets jittery over day-to-day changes in Trump's tariff policy as Mexico wins reprieve. The European Central Bank cuts interest rates against a backdrop of trade and defence threats. Star in focus.
ASX 200 slumps; Star close to Queen’s Wharf deal
Casino operator's deal with Hong Kong partners to help avoid administration. Ex-dividend trading, oil price slide weigh on bourse. Insurers face $2bn-plus hit from Cyclone Alfred. APRA moves to tighten financial board rules.