Trading Day blog: live markets coverage; Stock markets’ tax hurdle shifts; plus analysis and opinion
The ASX falls in the final session of a flat week, Caltex leaps at a Woolies hurdle and UBS warns on banks’ housing risk.
And that’s the Trading Day blog for Friday, December 15.
4.24pm: ASX ends lacklustre week lower
Local shares ran aground in the week’s final session on broadbased pressure following a Wall St rethink on Trump tax stimulus certainty.
The S & P/ASX200 index closed down 0.24 per cent, or 14.3 points on 5997, while the broader All Ordinaries index closed down 0.15 per cent, or 9.3 points to 6087.1.
The benchmark 200 index finished the week up 2.6 points, or less than 0.1 per cent.
“Uncertainty around US tax reform and government shutdown risk could provide a trigger,” says AMP’s Shane Oliver, “but given positive seasonality with ‘Santa Claus’ related strength usually kicking in from mid-December a correction is likely to wait till next year.”
The Australian dollar last bought US76.68 cents, 2 per cent higher for the week on a limp US dollar and holding gains in response to ABS data released Thursday revealing a number of unexpected job adds in November.
Read: Transurban shares up 4pc
Read: Banks at property slowdown risk
4.07pm: #1-5: This week by the numbers
MONDAY: $3.25 — Retail Food Group’s share price which fell 26.1 per cent to a five-year low following claims the owner of Gloria Jean’s and Donut King is charging exorbitant fees that are running franchisees into the ground. Managing director Andre Nell later denied the and said the plunge in shares did not reflect “the true value of the company”.
TUESDAY: 6 — Weeks it took for Unibail-Rodamco to negotiate a $US24.7 billion ($A32.7 billion) takeover of Westfield Corporation — ending the Lowy family’s control of the shopping centre giant. The Unibail-Rodamco takeover offer values each Westfield security at $10.01, and has been recommended to shareholders by chairman and major shareholder Frank Lowy.
WEDNESDAY: 53,500 — The number of reports of transactions Commonwealth Bank admits it was late in filing due to one systems-related error. CBA was later hit with another 100 alleged contraventions by AUSTRAC, including failing to quickly report two suspicious matters relating to the financing of terrorism.
THURSDAY: 61,600 — The total number of jobs the economy added in November. Australian Bureau of Statistics data showed the biggest increase in jobs in more than two years and far higher than the 19,000 positions the market had expected. Full- time employment accounted for the bulk, rising by 41,900 positions, while the number of part-time jobs rose by 19,700.
FRIDAY: 15pc — The week-on-week decline in Myer’s shares after the embattled department store chain said it expects 2017 first half profit will be “materially below” the $62.8 million it made in the same period a year ago thanks to woeful Christmas lead-up with a five per cent sales decline in the first two weeks of December.
AAP
3.54pm: Bold calls of 2017 worth watching
Shawn Langlios writes:
Donald Trump winning the presidential election in November 2016 and the ensuing “Trump bump” in the market set the stage for one shocker after another in 2017: a historic lack of volatility, resurgence of the FAANGs, a rally in Mexico stocks, and, of course, the mother of all eye-poppers — bitcoin’s surge.
Time for taking ownership. Let’s take a look at a few of the hits, misses and TBAs we covered over the course of an unpredictable 2017.
Bitcoin $1,000,000!!!: Accuracy rating: 7/10
We first mentioned John McAfee’s love for bitcoin back when the crypto was closing in on $US3,000. At the time, the cybersecurity legend said bitcoin was showing some enormous momentum and had plenty of upside.
Then, in July, he took it up several notches and said bitcoin would hit $US500,000 within three years or he’d eat a NSFW piece of himself. McAfee upped the ante a few months later.
It’s hard to give him too much credit for these calls, and they still seem pretty outlandish. But his original call from back in May -- “Bitcoin has enormous momentum” -- certainly hit the mark.
Alibaba vs. FAANG: Accuracy rating: 9/10
The FAANGs were having a relatively weak stretch during the late summer when TipRanks offered up a hi-tech alternative: China’s Alibaba.
The reason: Hedge-fund notables, led by the likes of David Tepper and Daniel Loeb, were loading up.
While FAANGs went on to notch some nice gains, they didn’t keep up with Alibaba, which almost doubled from that point.
Ron Paul’s bear call: Accuracy rating: 1/10
Maybe Ron Paul should stick with ... well, something other than market predictions. The multiple campaigner for president made headlines this summer with his forecast that stocks, plagued by an overrated recovery for the U.S. economy, could plunge 25pc by October. He even upped his call by late August for a 50pc pullback.
“If the market crashes tomorrow and we have a great depression, [Trump] didn’t do it in six months,” Paul said at the time, “it took more like six or 10 years to cause all these problems.”
With the year winding down, this was clearly one shocker of a bad call from Paul, considering the Dow’s push above 24,000.
Commodities rally, 2.0?: Accuracy rating: 5/10
Canaccord Genuity strategist Martin Roberge pointed to imminent rate hikes by the Bank of Canada in the middle of the summer as a trigger for a rally in commodities stocks.
“While Commodity Rally 1.0 in 2016 was driven by USD depreciation, we believe Commodity Rally 2.0 will be more fundamentally ‘demand’ driven,” he wrote.
Roberge said investors should overweight their portfolios with energy, materials and industrials Meh. Investors would have fared OK if they had listened to his advice, but they would have slightly lagged the S & P.
Amazon $1 trillion: Accuracy rating: 7/10
This one still has a ways to go, but Scott Galloway’s “Amazon $US1 trillion” is well on its way.
The NYU professor says the Seattle giant will become the first-ever company to reach that market cap, that it declared war on conventional brands, changed the relationship between a company and its shareholders, and deployed Alexa (its voice service/digital assistant) in clever ways.
“Alexa and Amazon have conspired and figured out that voice is a way to pull brand and some of the traditional mechanisms and accoutrements of brand-building out of the ecosystem, and then slowly but surely take control of your preferences,” Galloway said.
Amazon’s market cap currently sits at $US560 billion, having added more than half its value since the beginning of the year.
MarketWatch
3.41pm: WATCH: ‘You guys used banks?’
3.22pm: Bega smooths peanut ingestion
Bega says its takeover of Peanut Company of Australia is progressing well, with approximately shareholders associated with 87.7 per cent of issued shares accepting the offers as of yesterday.
Many of these shareholders are peanut growers in Queesland, according to Bega.
“The acquisition of PCA will help grow the supply of Australian grown peanuts for the manufacture of peanut butter at our Port Melbourne factory and supply to other PCA customers,” said Bega executive chairman Barry Irvin in November.
Earlier this year, Bega bought the rights to Kraft Peanut Butter and has since produced the spread under its own brand from the Port Melbourne factory that has done so for the last 55 years.
Bega remains locked in a dispute with Kraft’s US owner Mondelez over the legal rights to its peanut butter products, Kraft claiming Bega’s licence to use elements of the jar’s design expires December 31.
BGA last down 1.3 per cent on $7.46
3.00pm: The Trading Day ahead
Speaking to @seandcallow after 3pm on @SkyBusiness Also Sir Michael Hill @michaelhill joins me: is Amazon a worry to him? Join us #ausbiz https://t.co/76gNsqUDBo
— Helen Dalley (@helen_dalley) December 15, 2017
2.49pm: Banks at property slowdown risk
Cash-light mortgage holders have analysts concerned over bank earnings, UBS the latest to unsheathe its bear claws by cutting its ‘outer’ year earnings forecasts for each of the major banks by up to 3 per cent.
Slowing credit growth presents a risk to lender revenue, and as populous capital city house price growth slows, so too does spending backed by perceptions of sustained asset growth — the ‘household wealth effect’.
“The downward wage-price spiral, slump in retail sales, weak inflation … illustrates this pressure [on the consumer],” says UBS analyst Jonathon Mott.
Earlier today, Macquarie also came out with a cautious analysis of the property market in a note to clients, proposing house prices, household spending and the economy are “more exposed” to economic shocks on a rough annual basis.
“It is too early to rule out further modest dwelling price declines in the near term, including at the national level,” says Macquarie.
Both investment houses paint a far from rosy picture for major bank revenue dependant on a confident, creditworthy customer.
“The banks have a challenging outlook as the housing market slows, NIM comes under pressure from competition and switching between interest only to principal and interest, offsetting improved funding,” says Mr. Mott
Note: CBA, WBC, ANZ and NAB shares are all over 0.5 per cent lower in late trade amid broadbased pressure on the sharemarket.
2.11pm: Deal heralds digital showdown
James Dean writes:
A digital revolution in the media and entertainment industry is well and truly under way.
The deal announced between Walt Disney and 21st Century Fox is a prelude to a battle that pits traditional media companies against the might of Silicon Valley in the age of streaming video.
Bob Iger, the chairman and chief executive of Disney, knows what is coming. This year he made direct-to-consumer streaming services the company’s top priority. Disney will launch a sports streaming service next year and a family entertainment service in 2019. At the same time, it will stop selling its films and TV shows to Netflix.
1.53pm: Caltex served ACCC lifeline: UBS
Caltex has been served a lifeline, according to UBS, the investment bank upgrading its shares to a “buy” as the likelihood of BP’s expected cessation of its fuel supply agreement with Woolworths upon a planned acquisition of the supermarket’s service stations diminishes on opposition to the proposed deal raised by the competition watchdog yesterday.
“CTX has previously estimated the impact of losing the WOW supply agreement to be $150m,” says UBS, “[however] we forecast the net impact to CTX from retaining the WOW supply contract to be $125m earnings (EBIT).”
“If BP and WOW seek to have this decision overturned, it would, at the very least, cause a delay in the cancellation of the fuel supply agreement.”
The investment bank raises its 12m price target on Caltex by $4 to $39.10.
Bloomberg’s consensus analysts ratings show 4 buy, 5 hold and 1 sell rating on Caltex.
CTX last up 2.3 per cent on $35.56
1.43pm: Stock bear weight of Wall St reversal
The sharemarket remains under pressure as trade enters its late stages, local investors carrying over a weak lead from a sudden Wall Street reversal.
The S & P/ASX200 index was last 0.2 per cent lower on 5998.6.
Major bank shares post losses, fresh Austrac allegations against CBA and details from NAB’s annual general meeting the latest news on the sector.
Major miners shrink earlier gains, while Transurban (3.8pc) valiantly supports the index after the first of its shares traded hands on the public exchange since completing a $1.9bn capital raising for its new West Gate venture.
Meanwhile, the Australian dollar is steady at US76.70 cents against a weaker USD dollar, while most major commodities denominated in the greenback hold price gains.
SWING STOCKS
+ Cleanaway Waste Management (4.3pc), Crown Resorts (3.7pc), Altium (3.4pc), Oz Minerals (3pc), Mineral Resrouces (2.5pc)
— HT & E (-4.7pc), Macquarie Atlas Roads (3.9pc), Retail Food Group (3.7pc), Monadelphous (2.3pc)
David Swan 12.48pm: Start-ups to take on energy sector
A blockchain application for green energy trading and a new class of portable wind turbines are among the 11 global energy start-ups selected for Startupbootcamp’s three month Smart Energy program next year.
The Melbourne-based program, backed by EnergyAustralia and Spotless Group as well as the Australian and state governments, was on the hunt for world-class start-ups working on energy efficiency, energy independence and digitisation and analytics.
12.36pm: Global growth peak nears: PIMCO
The global economy is likely to hit “peak growth” for the current cycle in 2017 or 2018, according to PIMCO.
Moreover, a “Goldilocks extended” scenario is “very much baked into the consensus and asset prices, the world’s biggest bond fund warns.
“Barring a zombie apocalypse or a sudden spontaneous collapse in asset prices, the current Goldilocks environment of synchronised, above-trend global economic growth and low but gently rising inflation will likely persist in 2018,” PIMCO global economic adviser Joachim Fels and CIO global fixed income Andrew Balls say in their latest Cyclical Outlook report.
However they warn that US fiscal stimulus when the economy is near full employment will add $1 trillion to US debt over 10 years without adding much to potential growth and thus future tax revenues, which, while manageable while interest rates are low, could “come back to haunt the public coffers if interest rates rise in the future”, and will lessen potential fiscal stimulus in the next recession.
They also warn that he risks of a cyclical inflation overshoot in 2018 are rising given the globally synchronised nature of the expansion, additional fiscal stimulus, recent rises in commodity prices and super-easy financial conditions.
“Global structural forces are still weighing down inflation, but the cyclical pressures are clearly on the up,” they say.
A third risk for 2018 is that “the reduction of monetary accommodation — well-intentioned as it may be given decent cyclical growth — turns out to be too onerous for economies and asset markets that have become addicted to low short rates and depressed term premia across the yield curve.”
12.21pm: ACCC launches Optus suit over NBN
ACCC has taken Optus to the Federal Court, alleging it misled customers about the need to move quickly from its existing HFC network to the NBN, specifically that between October 2015 and March 2017 it made false and misleading representations by advising customers it would disconnect their HFC service within a specified time period as the NBN was coming to their area.
11.06am: Wagners lays solid 40pc groundwork
Wagners shares are going gangbusters with a 40pc gain since listing last Friday, virtually going one way from $2.70 to $3.80.
The float reportedly attracted strong blue chip institutional interest.
Wagners’ reputation is derived from its foundational QLD presence, with speculation mounting over potential involvement in planned Adani and Sydney airport developments.
Even after a 40pc rise in the share price in the past week, a market capitalisation of just $600 million seems undervalued for this company.
At this rate it will soon start to be covered by the major brokers, attracting wider attention from investors.
WGN last up 2pc at $3.70
Matt Chambers 10.53am: Protect China ties, says Orica
Explosives maker Orica has called for the federal government to be mindful of the nation’s trade relationship with China and says it is “vital” that corporate taxes here are cut.
Orica chairman Malcolm Broomhead’s comments to the company’s annual general meeting in Melbourne come amid tensions between Australia and China over foreign interference laws, and remarks by Turnbull government ministers that earned a rebuke from Beijing officials.
“It is important that we engage successfully with China, which will continue to grow as the regional and global economic powerhouse,” said Mr Broomhead, who also sits on the BHP Billiton board — read more
ORI last up 0.6 per cent on $18.13
10.35am: ASX tracks Wall St reversal lower
Australia’s S & P/ASX 200 share index weakens slightly after moderal offshore falls, more so in Europe.
“It’s also been a lively night of political issues in the US, with talk that House Speaker Paul Ryan will step down in late 2018, although he later refuted these claims,” says IG chief market strategist Chris Weston.
“After this week’s Alabama elections, there is building anticipation around the November 2018 US midterm elections now, where Paul Ryan has a strong role to play.”
“That said, the bigger focus and impact on markets has been on news Republican Senator, Marco Rubio, is opposing the Republican tax plan unless the refundable portion of child tax credits increases.”
Mr. Weston says Marco Rubio’s demands may have somewhat dented the prospect of tax reform actually materialising, but notes that the Fed only see a short-term impact from fiscal stimulus anyhow.
He also notes that in the past five days, any early strength in the ASX 200 has been sold, so it will be interesting to see if the index can stay above 6000 points.
In commodities, US crude oil rose 0.8 pc and copper rose slightly, while spot iron ore fell 0.9pc
Transurban (TCL) trades as much as 4 per cent higher following the news of its new $1.9bn West Gate Toll venture, while toll operator Macquarie Atlas Roads (MQA) falls as much as 5pc after Macquarie sold 11pc or the majority of its stake in the company at a discount to yesterdays close, while
S & P/ASX 200 last down 0.3pc on 5993.1
10.17am: Macquarie Atlas Roads dives 5pc
Toll operator Macquarie Atlas Roads (MQA) trades 5 per cent in the red after Macquarie sold 11pc or the majority of its stake in the company at a discount to yesterdays close.
10.13am: Transurban up 4pc in early trade
Transurban (TCL) lifts as much as 4 per cent in early trade to $12.72 as the first shares trade hands following the news of its new $1.9bn West Gate Toll venture.
9.57am: Commodity forecast upgrades flow freely
Commodity price upgrades have been plentiful this week and Macquarie has lifted its oil price forecasts today.
The broker sees Brent crude averaging $US56 a barrel in 2018, $US54 in 2019 and $US62 in 2020, and a long-term forecast of $US65.00
Macquarie leaves its forecasts for 2020 and thereafter unchanged, but increases those for next two years by $US6.38 and $US1.25 respectively.
Similarly it has raised its WTI crude forecasts to $US50.46 in 2018 and $US49 in 2019.
Thus, Macquarie now expects BHP’s FY18 earnings per share 2pc higher than it previously forecast and 4pc higher in FY19.
But apart from its long-term forecasts, the projections are below current prices near $US63.44 for Brent and $US57.17 for WTI.
“Although our base case is for balanced markets in 2018, both supply and demand are bearishly skewed, in our view,” Macquarie analysts say.
“In addition to US production growth, we believe several countries including Russia, Kazakhstan, UAE, and Kuwait will be challenged to maintain production cut compliance.
“Additionally, we believe recent demand growth is unsustainably strong and will be difficult to repeat beyond 2H17.”
9.14am: Transurban shares to restart trade
Transurban shares are no longer in a trading halt, the company announcing a 94 per cent institutional take-up rate of its $1.9bn capital raising for its new West Gate Tunnel deal sealed earlier this week.
TCL last $12.28
9.04am: Analyst rating changes
BHP raised to Neutral — JPMorgan
Rio Tinto cut to Neutral — JPMorgan
Caltex raised to Buy — UBS
Orocobre initiated as new Buy — Bell Potter
8.57am: Economy on song
Stellar employment growth has backed the Reserve Bank’s forecasts of above-trend economic growth next year despite some doubts about whether the pace of job creation is sustainable.
A massive 62,000 jobs were created in November, according to the Bureau of Statistics — more than three times the consensus estimate — and full-time jobs rose by 42,000. However, unemployment remained at 5.4 per cent, a five-year low, as labour force participation hit a six-year high.
Under-utilisation, a broad measure of space capacity, fell for a third straight quarter.
The data shored up expectations that the RBA may be able to start lifting interest rates in late 2018, pushing the dollar up to a five-week high of US76.75c after an overnight rally following benign US inflation data and no increase in the Fed’s projection of three rate rises next year.
8.54am: China group grabs NZ’s Trilogy
Chinese investment manager CITIC Capital Partners has offered $192 million to buy NZX-listed skincare company Trilogy International at a 28 per cent premium. Auckland-based Trilogy said it has entered a scheme of arrangement with CITIC Capital — which oversees US$4.7 billion ($6.1bn) of assets — to sell the shares for $NZ2.90 cash per share.
The offer price is a 27.8 per cent premium to Thursday’s closing price and a 28.1 per cent premium to the volume weighted after share price over the past three months.
The shares peaked at $NZ5 in August 2016.
SCOOP
8.42am: Myer board roll case gathers pace
Bridget Carter and Scott Murdoch write:
The prospect of Premier Investments and its chairman Solomon Lew trying to roll Myer’s board next year is strengthening, after the struggling department store revealed a pre-Christmas profit warning.
The retailer’s shares lost 10 per cent yesterday after it said total sales to the end of last month were down by 2.3 per cent. It also revealed sales in the first two weeks of this month were off by 5 per cent.
The stock closed yesterday at 65.5c, which gives it a market capitalisation of just $537 million.
Myer shares have lost 52.5 per cent in value so far this year, and the company is in danger of slipping out of the ASX200.
Premier is Myer’s largest shareholder. It holds 10.9 per cent and yesterday was digesting the profit warning — read more from DataRoom
MYR last 66 cents
8.27am: Rubio rocks Wall Street
Michael Wursthorn and Jon Sindreu write:
Stocks edged lower Thursday, as Republicans tried to keep their tax overhaul on track.
Major indexes pared earlier gains on doubts of whether Republicans would be able to reconcile key items in their tax proposal within a tightly set time frame. Republicans are now weighing whether to delay votes in the House and Senate next week that would have advanced the plan to the White House after Sen. Marco Rubio announced his opposition to the bill until it included bigger child tax credits for low-income families.
“That little bit of uncertainty is enough to knock” several points off the S & P 500, said Michael Antonelli, an equity sales trader at brokerage Robert W. Baird & Co. Still, Mr. Antonelli and other money managers say they expect a tax bill to get finished, however it may take longer than expected.
“This should all be resolved in the next few days,” Mr. Antonelli added.
The Dow Jones Industrial Average fell 76 points, or 0.3pc, to 24508, while the S & P 500 shed 0.4pc. The Nasdaq Composite declined 0.3pc.
Shares of financial firms in the S & P 500 declined 0.7pc, while the Russell 2000 index of small-capitalisation companies fell 1.2pc.
Analysts say they have been tracking the index of smaller businesses, as well as financial stocks, as a proxy for investor reaction to the tax plan — Dow Jones Newswires
Read: Murdoch, Disney in $68.3bn deal
Michael Roddan 8.23am: CBA still in breach: Austrac
Anti-money laundering agency Austrac yesterday dramatically broadened the suite of allegations against Commonwealth Bank it first lodged in the Federal Court in August, to include further instances where organised crime groups dealing in drugs and firearms and convicted terrorists allegedly washed money through CBA’s intelligent deposit machines.
The additional alleged contraventions are still ongoing, and Austrac chief executive Nicole Rose said they were identified after the civil penalty proceedings were launched and through the regulator’s ongoing investigation into CBA. “These allegations are very serious and reflect systemic noncompliance over approximately six years,” Ms Rose said — read more
CBA last $80.44
8.14am: Murdoch, Disney in $68.3bn deal
Ben Frtiz and Amol Sharma write:
News Corp executive chairman Rupert Murdoch has struck the biggest deal of his career in a $68.3 billion agreement to sell film and television assets from his 21st Century Fox company to Disney.
Walt Disney said it would buy select assets from 21st Century Fox for $US52.4bn in stock, as Disney moves to increase its footprint in video streaming and television amid a changing media landscape.
7.45am: Stocks set for steady open
The Australian share market looks set to open flat amid widespread negative sentiment on international bourses.
At 7am (AEDT), the share price futures index was down one point, or 0.02 per cent, at 6,012.
In the US, Walt Disney struck a deal to buy Rupert Murdoch’s Twenty-First Century Fox’s assets for $US52.4 billion in stock.
Fox rose 4.12 per cent and Disney 2.2 per cent, boosting the consumer discretionary sector by 0.5 per cent. Other media stocks Netflix and Comcast were also higher.
But, the deal did little to buoy sentiment on Wall Street, with gains in shares of technology and consumer discretionary companies unable to offset losses in healthcare stocks such as Johnson & Johnson.
In late afternoon trading, the Dow Jones Industrial Average was down 0.14 per cent, while the S & P 500 had fallen 0.31 per cent, and the Nasdaq had shed 0.45 per cent.
Locally, no major economic news is expected today.
In equities news, National Australia Bank and Orica have their annual general meetings scheduled.
The Australian market yesterday lost ground as gains for materials and energy companies were offset by falls in the utilities and property trust sectors, and the Australian dollar has been boosted by strong jobs growth. The benchmark S & P/ASX200 index fell 10.5 points, or 0.17 per cent, to 6,011.3 points.
The broader All Ordinaries index lost 6.7 points, or 0.11 per cent, to 6,096.4 points.
AAP
7.10am: Dollar extends gains
The Australian dollar has extended the gains it made on better-than-expected jobs figures to be higher still against a stronger US dollar.
At 6.35am (AEDT) on Friday, the Australian dollar was worth US76.76 cents, up from US76.65 cents yesterday.
Westpac’s Imre Speizer described the markets as “fairly contained” overnight with the European Central Bank and the Bank of England keeping their interest rates on hold, which had been expected.
And, the Australian dollar had added to the gains it made following the better- than-expected local jobs data.
“The US dollar index is up 0.1 per cent on the day ... (and the) AUD extended its earlier jobs data-related gains to 0.7680 — a one-month high,” Mr Speizer said in a Friday morning note.
Helping the US dollar were US retail sales data which showed a 0.8 per cent in November, which far surpassed expectations of a 0.3 per cent lift and the US Manufacturing PMI (Markit) which rose from 53.9 to 55.0 when it was expected to be unchanged.
There is no major local event risk for the local currency expected today.
The Australian dollar would likely retain upward momentum, with the next technical target its November 2 higher of 77. 30 US cents “which probably requires the USD to remain subdued,” Mr Speizer said.
The Aussie dollar is also higher against the euro but has fallen against the yen.
AAP
6.50am: Quiet year for Wall St
The US stock market is closing in on its quietest year in more than half a century.
The S & P 500’s average daily up-or-down move so far this year is 0.3 per cent, according to The Wall Street Journal’s Market Data Group. That’s just over half the comparable move last year and less than a fifth of the average daily move in 2008. If it finishes the year this way, it would be the smallest absolute average daily move since 1964, and the second smallest on record.
That hasn’t stopped stocks from notching significant gains since the end of 2016. The S & P 500’s 19 per cent rise so far this year is pacing for its biggest annual rise since 2013. That’s an outcome few would have expected at the start of 2017, when a poll of Wall Street analysts by Birinyi Associates showed they expected gains of just 6.3 per cent on average.
And yet, there have been few major moves in either direction. There have been just eight 1 per cent moves in 2017, which, if it stays that way, would be the fewest since 1965. There have been zero 2 per cent up-or-down moves, which would be the first year since 2005 that’s happened. In the S & P 500’s nine decades, it’s only had 10 years without a 2 per cent move.
This looks all the more surprising when considering that bitcoin, the year’s hottest investment toy, has had an average move of 3.4 per cent each day in 2017. The S & P 500 has never even approached an average daily move of that size (the index’s biggest year was 1932, at 2.3 per cent). Still, bitcoin’s average move is neither the highest nor lowest for the cryptocurrency in recent years.
The Dow industrials look pretty much the same as the S & P 500. The 0.31 per cent average daily move up or down would be the smallest since 1964, according to the Market Data Group. The tech-heavy Nasdaq Composite index has had an absolute daily move of 0.44 per cent on average, the smallest since 1989.
Dow Jones Newswires
6.45am: US stocks slip despite media gains
US stocks slipped, as declines in healthcare stocks offset gains in shares of Walt Disney and other media companies.
The Dow Jones Industrial Average lost 18 points, or less than 0.1 per cent, to 24567 in recent trading, while the S & P 500 fell 0.1 per cent. The Nasdaq Composite declined less than 0.1 per cent.
Australian stocks looks set to open steady. At 6.55am (AEDT) the SPI futures index was down one point.
Health-care companies in the S & P 500 dragged on the index, losing 0.9 per cent. Johnson & Johnson fell 0.8 per cent, among the biggest percentage declines in the Dow industrials.
Several media companies’ stocks got a bump after Disney said it would buy 21st Century Fox’s film and television studio and its international and cable TV businesses.
“Competition with Netflix, Amazon and now, with Apple on the scene, you got a big fight for Disney and they’re using a lot of money to do it,” said Chris Bertelsen, chief investment officer of Aviance Capital Partners, an advisory firm with $US2.2 billion in assets under management. “I own (Disney) stock and I’m glad it’s up,” he said, adding that he still has some concerns with some of the deal’s terms, such as its price.
Disney’s stock jumped 2.7 per cent. Shares of 21st Century Fox surged 5.2 per cent.
News Corp, the Australian’s parent company, and 21st Century Fox share common ownership.
Other media companies rose following the deal’s announcement. Shares of CBS rose 1.8 per cent.
In Asia, equities were rattled by a weaker dollar and a surprise move by the People’s Bank of China, which raised some short-term funding rates by 0.05 percentage point. The Shanghai Composite closed down 0.3 per cent and Hong Kong’s Heng Seng fell 0.2 per cent. Japan’s Nikkei Stock Average dropped 0.3 per cent.
Dow Jones Newswires
6.40am: euro sags as rates held steady
The euro slid back under $US1.18 after the ECB held interest rates and kept the easy money spigot open despite hiking its growth forecast for the eurozone.
Meanwhile US stocks added to records following solid US retail sales data and as Disney advanced following a mammoth acquisition of key 21st Century Fox assets.
The European Central Bank, as expected, left its headline interest rates unchanged at historic lows, including the main refinancing rate pegged at zero, and kept its huge support for the eurozone economy in place.
But it significantly lifted its eurozone growth forecasts, expecting to see the economy expand 2.4 per cent this year, 2.3 per cent in 2018 and 1.9 per cent in 2019.
However inflation is not expected to return to its optimal level of just under 2 per cent, with the ECB saying it expects consumer prices to rise 1.7 per cent in 2020.
The euro came ” ... under pressure as the ECB Chief Mario Draghi left the option on the table for extra monetary easing” said market analyst David Madden at CMC Markets UK.
The weaker euro didn’t help eurozone stocks. Frankfurt’s DAX 30 ended the day down 0.4 per cent, while the CAC 40 shed 0.8 per cent.
The Bank of England also kept its key interest rate at 0.5 per cent, though it said it was keeping an eye on Britain’s Brexit-fuelled inflation.
London stocks fell 0.7 per cent as investors looked past official data showing that retail sales rebounded 1.1 per cent in November from October, buoyed by Black Friday price reductions.
AFP
BHP, CSL, banks, Wesfarmers, Goodman lift ASX 200 to record high; Mesoblast top gainer
Bullish sentiment boosts local bourse as ASX 200 breaks key chart point. BHP's FY26 production forecasts more subdued amid Jansen blowout, but CEO upbeat on China. Mesoblast banks first millions from key US product sales.
Rate cuts locked in after June data surprise
June jobless rate spikes to 4.3 per cent, with some saying RBA's recent hold call is 'policy error'. AUD down. BUMA slaps statutory demand on Bowen.