Trading Day blog: live markets coverage; Bitcoin tea leaves hit fresh highs; plus analysis and opinion
Local shares book gains as whirl of corporate activity sends takeover targets soaring, while bitcoin futures start trade.
And that’s the Trading Day blog for Monday, December 11.
4.24pm: Stocks book slim closing gains
Australian shares have finished marginally higher after bouncing around the 6,000-point mark throughout the day, with mild gains in the energy, mining and financial sectors.
The benchmark S & P/ASX200 stock index was up 3.9 points, or 0.07 per cent, at 5998.3 points at 4.15pm (AEDT) on Monday, while the broader All Ordinaries index was up 4.5 points, or 0.07 per cent, at 6,081.9 points.
The SPI200 futures contract was up two points, or 0.03 per cent, at 6,003 points.
AAP
Read: ASX ekes out slim, late gains
Read: Bitcoin tea leaves hit new highs
4.03pm: Bitcoin futures trigger circuit breaker
Bitcoin futures have cooled slightly after triggering circuit breakers designed to maintain an orderly market.
A two-minute halt occurred after futures rose 10 per cent and a five-minute halt occurred after a 20 per cent rise, in keeping with CBOE rules.
The nearby futures contract is currently up about 19 per cent near $US17,820 after rising as much as 25 per cent to $US18,700.
Read: Bitcoin tea leaves hit new highs
3.45pm: Department store headaches worsen
Simone Ziaziaris writes:
The Australian department store market could be shrinking even more quickly than previously thought, as Amazon’s disruption becomes more pronounced and consumers shift away from traditional spending habits.
Morningstar analysts believe tough times for Australian department stores are unlikely to subside soon, and say the sector will be 30 per cent smaller this year than previous estimates.
Shrinking market size and intensifying competition will reduce the department store sector to $17.5 billion in fiscal 2017 compared to Morningstar’s previous estimate of $24 billion, and to $16.7 billion by 2027, the equity firm said — read more
AAP
3.24pm: ASX ekes out slim, late gains
Local shares remain marginally higher as earlier, healthier gains on light volume lose traction ahead of a new week of trade on Wall Street due to commence overnight.
The S & P/ASX 200 index was last 0.1 per cent higher on 5999.9.
The Australian sharemarket sits squarely in the middle of Asian counterparts, Japan’s benchmark Nikkei up 0.2 per cent, Korea’s KOPSI also up 0.2 per cent, Hong Kong’s Heng Seng up 0.5 per cent and China’s tech-heavy Shenzen Composite up 0.9 per cent.
Short a definitive lead, the market plays host to a whirl of coporpate activity a fresh bidding war sends AWE Group another 13 per cent higher, a preliminary deal of sale to Cleanaway Resources sends Tox Free Solution soaring 20 per cent, while Retail Food Group plunges over 20 per cent after Fairfax Media reports surfaced over the weekend scrutinising its franchisee practices.
Meanwhile, the Australian dollar trades 0.2 per cent higher against a weaker US dollar to by $US75.25 cents ahead of NAB’s November business survey released due 11.30am (AEDT) tomorrow.
2.55pm: 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)
3.00pm: Peter O’Connor — Senior Commodities Analyst, Shaw and Partners
3.05pm: Raymond Chan — Morgans
3.15pm: Politics Panel live
3.30pm: David Bassanese — Chief Economist, Betashares
3.50pm: Michael McCarthy — Chief Markets Strategist, CMC Markets
4.00pm: Scott Phillips from The Motley Fool and Tony Farnham from Patersons Securities guest host
(All times in AEST)
2.35pm: ANZ signs FX conduct code
ANZ has signed the FX Global Code of Conduct, according to its website
Leading the push for alignment across the sector, this is another win for RBA Deputy Governor Guy Debelle.
ANZ last up 0.2 per cent on $28.56
2.23pm: US markets in a ‘slow bubble’
James Dean writes:
US stock markets are in a “slow bubble” and companies are at least as overvalued by investors as they were just before the Great Depression, according to the Nobel prize-winning economist who predicted the dotcom crash and global financial crisis.
Robert Shiller, a professor at Yale University, invoked the idea that an overinflated bubble has been building in US share markets in the same vein as the “tulip mania” that gripped Holland between 1634 and 1637, when the price of flowers surged and then collapsed.
2.14pm: Bitcoin tea leaves hit new highs
Bitcoin jumps to its highest intraday level during Asia trade, last $US16,648 as the price of the cryptocurrency’s debutant front month futures contracts simultaneously hit intra-session highs of their own — last up 20 per cent on $US18,010.
This indicates the front-month market — last 1672 contracts strong — values bitcoin at a 7.6 per cent premium by January 18 next year.
In the month-to-date, bitcoin has added 115 per cent.
Brokerage IG is registering a surge of new bitcoin inquiries from prospective customers since the futures contracts came online at 10.00am (AEDT), even though it has effectively offered the positioning through a contract-for-difference (CFD) product for some time.
“It’s been absolutely crazy,” says chief market strategist Chris Weston, “there’s been a of interest in the past three months, but today it’s really picked up.”
“Half the calls are all about bitcoin at the moment.”
Darren Davidson 1.32pm: Media primed for $16bn shake-up
An “aggressive” wave of deals next year in Australia’s $16 billion media sector could finally occur after the Turnbull government passed the most sweeping shake-up of ownership controls in decades, according to the industry’s top leaders.
James Warburton, the incoming chief executive of APN Outdoor (APO) and outgoing boss of Supercars, has signalled his intention to go on the acquisition trail after the firm’s $1.6bn merger with rival oOh! Media collapsed under his predecessor amid competition regulator concerns.
Asked whether the industry will see M & A activity next year after a flurry of deals failed to eventuate after the laws came into effect on October 17, Mr Warburton revealed his plans in his most forthright comments since his appointment that same month.
1.16pm: Retail Food issued speeding ticket
Retail Food Group has been issued with a speeding ticket from the exchange operator (ASX) after its shares fell 30 per cent in the first session since Fairfax Media reports scrutinising its franchisee practices surfaced.
The company responded to investor and media interest on its website earlier today by outlining measures underway to ensure the long-term viability of the franchisees and its own business model.
Retail Food has enlisted Deloitte as part of its ongoing two year-long business review commenced in the later half of this calendar year.
RFG last in a trading halt, down 20 per cent on $3.50.
Bridget Carter 12.56pm: Cleanaway enlists ANZ, Westpac backing
The listed waste disposal company Cleanaway (CWY) has called on ANZ and Westpac to help fund its $665 million takeover of rival Tox Free Solutions.
The banks provided an $875m underwritten facility as part of an overall refinancing that will see its debt levels lift by $285m — more to come from DataRoom
TOX last up 20 per cent on $3.40
12.26pm: ASX shrinks gains as caution sets in
The sharemarket trades either side of its starting mark, caution creeping in after opening gains on light volume.
The S & P/ASX 200 last traded 4.6 points higher on 5999.4.
Big bank shares trade mixed, while heavyweight miners remain broadly in the black on the first afternoon trades.
Meanwhile, AWE Group and Tox Free Solutions hold gains after soaring at the open as domestic M & A activity heats up.
Fireworks remain grounded this morning as the first bitcoin futures commenced trade on the CBOE exchange. The spot price registered an initial 10 per cent jump but has since settled as both sit within range of $US16,000.
Supratim Adhikari 12.19pm: Slow NBN ‘a concerning trend’
Optus has finally revealed exactly how many of its customers were sold substandard services over the National Broadband Network (NBN), with 8700 homes to receive compensation from the telco.
According to the Australian Competition and Consumer Commission (ACCC), the telco had failed to deliver the high speeds offered to its customers between September 1, 2015 and June 30, 2017, including the “Boost Max” plan which advertised maximum download speeds of up to 100 megabits per second (Mbps) and maximum upload speeds of up to 40 Mbps.
12.03pm: Bitcoin futures funnel $13m
Its opening two hours of trade has seen a total of $13 million flow into the first regulated exchange-based bitcoin futures market, so far 810 front month contracts have changed hands across the Chicago Board Options Exchange last marked at $US15,930.
The total value of spot bitcoin fast approaches $300bn.
Read more: Bitcoin in volatile debut
11.45am: 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: Martin Crabb — Shaw and Partners
12.00pm: Tony Davidson from Henderson Maxwell guest hosts
12.15pm: James King — Currency Analyst, AFEX Australia
12.30pm: Joe Mayger — Lakehouse Capital
12.45pm: Stephen Walters — Chief Economist, AICD
(All times in AEST)
11.28am: Bitcoin ‘bubble’ unshortable: Taleb
Harry Wilson writes:
A world expert in financial options has warned that those hoping to use the creation of contracts allowing investors to bet against the spiralling price of bitcoin were doomed to lose money.
Nassim Nicholas Taleb, an authority on derivative markets, said that there was “no way to short the bitcoin ‘bubble’ ” properly.
The American-Lebanese academic and hedge fund manager was tweeting to his more-than-200,000 followers hours before trading was due to go live in the first futures based on the virtual currency. He said that the opening of trading on the Chicago Board Options Exchange was unlikely to halt a rise that has led the cryptocurrency’s price to nearly treble in a month to about $US15,000, briefly approaching $US20,000.
The rise in its value has surpassed “tulip mania” in the 17th century, leading some to suggest that it is set to create the largest financial bubble ever.
Trading of bitcoins is unregulated, but buying and selling on a large exchange such as Chicago is. Goldman Sachs is rumoured to be considering allowing the clearing of bitcoin trading by its clients.
The Times
11.08am: ASX lofts over 6000 in light trade
Australia’s S & P/ASX 200 share index is up 0.2pc at 6004 after an early rise to 6015 amid gains in the financials and materials sectors.
Retail Food Group is down 22pc, the company rejecting Fairfax Media reports that questioned its franchisee practices.
AWE shares rose as much as 13 per cent after a Mineral Resources sparked a bidding war for the industrial materials producer, Tox Free Solutions remains near 20 per cent higher after entering into a preliminary sale to Cleanaway Waste Management, while Getswift trades 2 per cent lower after completing a capital raising, readying for new business on its deal with Amazon and at share price nearly double that before news of the partnership broke.
CSR is strongest, up 3.8pc at a 6-week high of $4.86.
Base metals and producers also strong with Independence, St Barbara, OZ Minerals up 2.4-3.7pc.
Share trading volume is about 45pc below the 20-day moving average, suggesting buyers have little conviction despite the solid gains in offshore equities and commodities that followed strong China trade and US jobs data on Friday.
Investors await major central bank meetings this week including the FOMC on Wednesday.
11.01am: Website ‘slower than usual’: CBOE
Due to heavy traffic on our website, visitors to https://t.co/jb3O722hoo may find that it is performing slower than usual and may at times be temporarily unavailable. All trading systems are operating normally.
— Cboe (@CBOE) December 10, 2017
10.57am: Retail Food sheds light on review
Retail Food Group has rejected Fairfax Media claims it is not appropriately supporting its Franchise Parnters, affirming its own performance is wholly dependent the subsidiaries’ success.
The company says it has engaged franchise partners, implemented operational measures within a new long-term framework and has engaged accounting group Deloitte to support ongoing two-year business review started in the second-half of calendar year 2017.
Retail Food takes its wage compliance responsibilities “very seriously” and has taken steps to better inform, support and educate Franchise Parnters on their own obligations in relation to the matter and to provide employees with avenues to raise their own concerns.
Retail Food Group (RFG) shares plunged as much as 29 per cent to $3.21 at the open and continue to trade near these levels following the media report.
10.32am: Bitcoin futures exchange site crashes
Avi Salzman writes:
The Chicago Board Options Exchange launched bitcoin futures trading at 10.00am (AEDT) on Monday, and its website appeared to crash almost immediately. Early data indicated that the front-month future was trading higher, to about $16,100 just after launch.
Dow Jones Newswires.
10.24am: Retail Food Group hits 5y low
Retail Food Group shares dived 27pc to a 5-year low of $3.21 dive after Fairfax media reports over the weekend questioned the company’s business practices, specifically its handling of franchisees.
RFG shares last down 24pc at $3.33.
10.08am: Bitcoin jumps 10pc as futures trade
The spot price of bitcoin jumps as much as 10 per cent to $US15,896 as the cryptocurrency’s first futures contracts change hands on the Chicago Board Options Exchange (CBOE).
One-month futures contracts remain within range of the spot price, last $US15,460 in the opening minutes of trade.
9.57am: ASX tipped higher on US jobs beat
S & P/ASX 200 expected up 0.4pc at a 1-week high near 6020 after solid gains on Wall Street followed “Goldilocks” US jobs data.
The S & P 500 rose 0.6pc to a fresh record high on a daily and weekly closing basis after data showed a 221K rise in US jobs — above a 195k consensus estimate — while unemployment met expectations of 4.1pc, but average hourly earnings growth fell short at 0.2pc vs. 0.3pc expected.
US consumer sentiment missed expectations but remains relatively high.
Commodity prices were also solid, with spot iron ore up 2.8pc at $US68.07, Brent crude oil up 1.9pc to $US63.40, and LME copper up 0.5pc.
Slightly weaker than expected China CPI data over the weekend could take the edge of commodities today. But while China’s CPI rose 1.7pc vs. 1.8pc expected, it was just a slight dip in a rising trend, and PPI met expectations with a 5.8pc rise.
Overall, the S & P/ASX 200 has remained resilient despite some “opportunities” to fall in recent weeks.
Consolidation may prevail as the market waits to see if the Fed increases its “dot plot” of interest rate projections this week.
Assuming no change there, the normal Santa Claus rally should emerge in the next two weeks, potentially pushing the S & P/ASX 200 above the recent decade high of 6052.1 before the start of the year, when some profit taking in the US market is likely once tax cuts are confirmed.
9.54am: Short interest to raise Bitcoin stakes
Alexander Osipovich writes:
Is bitcoin not volatile enough for you? Try trading bitcoin futures.
The overnight launch of the first US bitcoin futures will let investors add bitcoin to their portfolios through the same electronic brokerages they use to trade stocks and options. And futures will allow people who think bitcoin is overpriced to “short” it — bet that its price will fall.
But a key point is that futures will let risk-loving traders place leveraged bets on bitcoin. That means they can magnify their profits if their bets pay off, but also face potentially steep losses if they are wrong.
9.47am: ASX tipped to open higher
The Australian share market looks set to open comfortably higher after Wall Street lifted on strong US jobs figures, Europe rose on a Brexit breakthrough and Asian indexes gained after economic news beat expectations.
At 7.59am (AEDT), the share price futures index was up 23 points, or 0.38 per cent, at 6,024.
In the US, non-farm payrolls rose by 228,000 jobs in November, Labor Department data showed, topping expectations calling for a rise by 200,000 jobs, while average hourly earnings rose 0.2 per cent.
In Europe, Britain and the European Union struck a divorce deal paving the way for talks on future trade ties, easing immediate pressure on Prime Minister Theresa May and boosting hopes of an orderly Brexit.
In Asia, revised data showed Japan’s economy growing twice as fast as first thought as business spending jumped, while Beijing reported exports surged 12.3 per cent in November from a year earlier, more than double the forecast, while imports climbed almost 18 per cent.
Wall Street, following on from European and Asian markets, gained around half a per cent, giving Australia’s indexes a strong positive lead.
The Dow Jones Industrial Average rose 0.49 per cent, the S & P 500 gained 0.55 per cent and the Nasdaq Composite added 0.4 per cent.
Locally, in economic news on Monday, the CoreLogic capital city house prices survey for the December 10 is due out.
In equities news, Oroton is slated to have its first creditors meeting in Sydney, after the luxury handbag retailer went into voluntary administration on November 30.
The Australian market on Friday closed comfortably higher with an end-of-week rally across most sectors, led by a jump in energy stocks.
The benchmark S & P/ASX200 index closed up 16.7 points, or 0.28 per cent, at 5,994.4 points.
The broader All Ordinaries index rose 16.6 points, or 0.27 per cent, to 6,077.4 points.
AAP
Bridget Carter 9.32am: iParnters launches FANG fund
New online investment platform, iPartners Pty Ltd, has launched a fund targeting new wave stocks, commonly called FANG — Facebook, Amazon, Netflix and Google.
The fund is worth $20 million and is for Australian investors.
It is a one year transaction and offers a 13 per cent guaranteed income to investors, with exposure to losses only if one of the stocks falls 30 per cent or lower during the period.
The fund, which will close on December 13, 2018, will be in Australian dollars.
The launch of the second series follows the successful raising by the platform for a Series 1 offering, with a 10 per cent guaranteed return on five stocks — Telstra, Woodside, Brambles, Westfield and QBE over one year.
Investors with a minimum of $10,000 can join the iPartners platform to gain access to the fund’s high growth opportunities and asset classes that normally require a greater investment threshold.
9.23am: Mineral Resources confirms AWE bid
AWE Group has provided an update on its corporate activities to shareholders during its share purchase plan period, remaining the centre of a bidding war between a China-backed consortium and Chris Ellison-backed Mineral Resources (MIN).
AWE says it has reduced its debt facility to $125m from $300m, faces a new $10.4m tax assessment from the Indonesian government and has extended the sale payment date of its Bulu PSC project.
After news of the bid surfaced earlier this morning, Mineral Resources since confirmed it has tabled a fresh $510m scrip offer for AWE, rivalling a joint $460m joint cash bid by China Energy Reserve and Chemical Group — read more
AWE last 73 cents
Bridget Carter 9.04am: Craveable seals $315m liferaft
The Archer Capital backed quick service restaurant operator Craveable Brands has completed the refinancing of its debt through Morgan Stanley and Herbert Smith Freehills.
The group behind Oporto Chicken, Red Rooster and Chicken Treat is the largest Australian owned quick service restaurant operator and has refinanced loans worth $315 million.
Morgan Stanley and Herbert Smith Freehills advised on the refinancing via an Australian dollar denominated term loan B structure.
Craveable brands operates more than 570 restaurants, employs more than 12,500 people and serves over 150,000 customers on a daily basis.
Chief executive Brett Houldin said the company was welcoming a mix of leading global and local institutions as stakeholders of the business.
The issue was heavily oversubscribed, according to Mr. Houldin.
More to come from DataRoom
8.55am: Cleanaway in $831m Tox deal
Cleanaway Waste Managment has struck a preliminary deal to acquire ASX-listed Tox Free Solutions for $3.425-a-share at an enterprise value of $831m.
Tox directors have voted unanimously that Toxfree shareholders vote in favour of the deal, while security holders to receive an additional interim dividend payment of 5 cents-per-share.
Cleanaway plans to fund the venture with a mix of debt and equity, the latter raised via a planned $590m, 1 for 3.65 fully underwritten capital raising and remains in a trading halt initiated earlier this morning.
TOX last $2.84, CWY last $1.47
8.53am: Analyst rating changes
Invocare cut to Sell — UBS
Bega Cheese initiated at Neutral; $8.30 target price — UBS
IAG cut to Outperform — CLSA
Metcash raised to Netural — UBS
Over the Wire cut to Hold — Bell Potter
Independence Group raised to Buy — Citi
Matt Chambers 8.33am: Ellison-backed rival AWE bid surfaces
Chris Ellison’s Mineral Resources is set to table a $510 million scrip offer for AWE in an effort to trump China Energy Reserve And Chemical Group’s $460m cash offer.
It is believed the bid, at a price of about 80c per share — compared to CERCG’s 73c cash offer — will be released this morning.
AWE last 73 cents, MIN last $17.86
8.28am: Cleanaway set to announce acquisition
Cleanaway Waste Management (CWY) has entered into a trading halt this morning pending an announcement of a proposed material acquisition and related institutional capital raising component.
More to come.
Alan Kohler 8.15am: We need to talk about tax
The question of what to do about company tax, and therefore taxation generally, is becoming urgent, as well as hard.
The US Republican Party now seems to have entirely jettisoned fiscal conservatism and is intending to massively increase government debt in order to turn America into a tax haven.
If the cut from 35 to 20 per cent happens, as now seem very likely, despite the cost of U$1.5 trillion over 10 years, it would move the US company tax rate from one of the highest in the developed world to among the lowest — with the UK, Finland, Iceland, Russia and Turkey.
The question of whether this is a good idea for the American economy or society (it’s not, in my view), and whether the Republicans genuinely believe that it is or are simply paying off their donors in what’s looking more and more like a kleptocracy (it is), is irrelevant.
Countries like Australia, marooned at a 30 per cent company tax and with a stalled plan to gradually get it to 25 per cent at barely affordable cost, will just have to deal with the reality of both the US and UK taxing companies at 20 per cent.
This is, needless to say, a big deal.
7.05am: Dollar slips against greenback
The Australian dollar is a little lower against its US counterpart, which strengthened following strong US jobs data.
At 6.35am (AEDT), the Australian dollar was worth US75.11 cents, down from US75.14 cents on Friday.
US job growth in November increased solidly, painting a portrait of a healthy economy that analysts say does not need the kind of fiscal stimulus that President Donald Trump is proposing, even though wage gains remain moderate. Non-farm payrolls rose by 228,000 jobs amid broad gains in hiring as the distortions from the recent hurricanes faded, Labour Department data showed on Friday, while October’s revised figures showed the economy added 244,000 jobs instead of the previously reported 261,000.
November’s unemployment rate was unchanged at a 17-year low of 4.1 per cent, average hourly earnings rose five cents or 0.2 per cent, after dipping 0.1 per cent the prior month.
The US dollar was trading higher against a basket of currencies, after the data release.
The Aussie dollar is fractionally higher against the yen and fractionally lower against the euro.
AAP
6.40am: US data set to boost ASX
Strong leads from international markets are expected to send Australian shares into positive territory when trade resumes today.
AMP Capital chief economist Shane Oliver says the benchmark S & P/ASX200 is likely to gain at the open after better-than-expected jobs figures buoyed US stocks on Friday and eurozone shares closed 0.6 per cent higher. The payroll report in the US, which showed jobs rose by 228,000 in November, helped push the benchmark S & P 500 up by 0.55 per cent.
“We’re seeing a continued goldilocks pattern of data which is not too hot and not too cold,” Dr Oliver said.
At 6.55am (AEDT) the SPI futures index was up 23 points.
This week, investors will be keeping a keen eye on the US Federal Reserve’s meetings on Tuesday and Wednesday, from which the Fed is expected to deliver a quarter per cent rate hike early on Thursday (AEDT). Dr Oliver said people will also be keen to know if the Fed plans to lift rates four times instead of three in 2018, which could dampen the market.
Closer to home, the Australian Bureau of Statistics (ABS) will release employment data for November on Thursday, which is expected to show 19,000 jobs were added and the unemployment rate remained at 5.4 per cent.
The ABS will also release home prices for the September quarter on Tuesday.
The National Australia Bank business survey for November comes out tomorrow and consumer confidence data for December via Westpac and the Melbourne Institute will be released on Wednesday.
Reserve Bank of Australia head Philip Lowe, RBA Head of Payments Policy Tony Richards and RBA Assistant Governor (Financial Markets) Chris Kent will also all speak publicly on Wednesday.
The Australian share market ended the day comfortably higher on Friday, with the benchmark S & P/ASX200 stock index up 0.28 per cent at 5,994.4 points. The local currency was trading at 75.14 US cents.
AAP
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