Trading Day: live markets coverage; ASX wipes $1.5bn from Wesfarmers; plus analysis and opinion
The local sharemarket holds slim gains, while the market cleaves Wesfarmers value on a mixed sales update.
Trading Day for Wednesday, October 25.
Samantha Woodhill 4.43pm: Stocks lift as hawks take blow
The local share market ended the session higher as weaker-than-expected inflation data cooled rate hike expectations.
The benchmark S & P/ASX200 was up 7.989 points, or 0.14 per cent, at 5905.602 points. The broader All Ordinaries index was up 10.191 points, or 0.17 per cent, at 5972.699 points.
Headline consumer prices rose 0.6 per cent in the quarter to September, 0.2 per cent lower than market consensus according to Commonwealth Bank economics director John Peters.
“Given that the CPI was below financial market, RBA and CBA expectations, there was nothing to scare the horses about a potential earlier than previously anticipated RBA rate hike,” he said.
In financials, NAB ticked up 0.34 per cent to $32.65. Commonwealth Bank dipped 0.04 per cent to $78.63. Westpac lost 0.15 per cent to $33.34 and ANZ edged 0.1 per cent higher to $30.50 — read more
4.35pm: Market wipes $1.5bn from Wesfarmers
Investors have erased nearly $1.5bn in market capitalisation from diversified heavyweight Wesfarmers following company’s first-quarter FY18 sales update, shares down 2.9 per cent at $41.49 on the close.
First-quarter sales performance across the company’s retail business units was mixed. Falls in its from its flagship grocer Coles (-0.3pc), Target (-6.4pc) and Bunnings UK (-17.5pc) buffeted by performance in Bunnings ANZ (+11.5pc), Kmart (+9pc) and Officeworks (7.8pc).
Wesfarmers coal production also softened, the unit booking a 1.6pc drop in production compared to first-quarter FY17 to 3Mt.
“Department stores were mixed, with Kmart reporting strong growth following price investment, which is clearly impacting Target’s turnaround,” says Citi.
“More than twelve months into Target’s turnaround, it is yet to deliver any progress on sales, as the business remains under pressure.”
The investment bank prefers Woolworths (WOW) over Wesfarmers (WES) given the headwinds faced by Coles, Target and Bunnings UK.
4.25pm: Bega, Kraft in peanut butter pickle
Bega has this afternoon leapt to reassure shareholders of its acquisition of confectionary spreads from Kraft offshoot Mondelez, the humble Aussie food maker updating the market on a legal dispute with the US giant surfacing earlier today.
Vegemite and Kraft’s Peanut Butter found its way back into Australian hands after the transaction earlier this year, however Bega and Kraft now appear to be locking horns on news the latter is planning a full 180, opting back in for a peanut butter offering Down Under after having originally divested the rights with Mondelez back in 2012.
Exactly how the new Kraft product will taste and look on Australian shelves remains unknown, however those just getting used to the idea of the 55-year strong Kraft peanut butter taste in a Bega jar next year may have just been thrown another curveball.
“[We have] continued to produce Australia’s favourite peanut butter, using the same never oily, never dry recipe, made by the same people, in the same factory in Port Melbourne that has been making peanut butter for over 55 years,” said Bega in a statement.
“The only change has been the removal of the Kraft brand.”
BGA closed up 2.2pc at $7.74
Sarah-Jane Tasker 4.15pm: Tabcorp fined over jelly beans
Wagering giant Tabcorp has been hit with a $11,500 legal bill for breaching rules on a NSW gambling promotion that involved giving consumers jelly beans and mints.
The Australian-listed company pleaded guilty in the Downing Centre Local Court for failing to included a gambling warning notice on a promotion on March 30 this year.
The company co-operated with a Liquor & Gaming NSW investigation and was convicted on two counts of publishing gambling advertising without the required warning messages — read more
TAH closed up 0.5pc at $4.36
3.54pm: Retail landlord’s remedy ‘in the money’?
Retail landlord Stockland says flat a “challenging” retail environment and flat sales growth in its retail development arm isn’t stopping it from keeping discretionary store allocation a top shelf priority.
Addressing shareholders at the company’s annual general meeting in Sydney’s Westin hotel today, Stockland’s CEO Mark Steinert said that although he saw a subdued consumption environment on low wages growth, high power costs and price deflation, the company will nonetheless double down on “services, food, lifestyle, mini majors, entertainment and leisure offerings” in its centre mix.
The retail space remains entertaining viewing for Australian investors as record low wage growth and high energy prices keep downward pressure on disposable income. Both released earlier today and each a pressure on national headline retail sales, the latest set of inflation data revealed surprisingly weak inflation and Coles results in part confirmed heavy price competition in Aussie consumer staples.
So what’s Stockland eating for breakfast? The landlord’s Retail Town Centre arm more than 50 per cent of its portfolio, Credit Suisse says it’s located a source of surprise from Stockland eggs in other baskets.
“We estimate that underlying residential price growth not taken to account by SGP on lots sold over the past three years has resulted in a build-up of some ~A$470mn of ‘deferred’ profit (1.7x SGP’s entire FY17 Residential profit),” says the investment bank.
“In addition, the extremely strong price growth witnessed in the Melbourne land market over FY17 sees SGP’s entire Victorian portfolio now deeply in-the-money.”
Credit Suisse analysts upgraded Stockland shares ahead of today’s open to “outperform” from “neutral” and freshened up its 12-month target price on the stock to $4.71.
SGP last up 3.2 per cent at $4.48
3.35pm: Fed chair by show of hands
Kate Davidson and Peter Nicholas write:
President Donald Trump asked Republican senators for a show-of-hands poll on two candidates he is considering to be the next chairman of the Federal Reserve.
Senator Tim Scott said the President, who was on Capitol Hill at a Senate GOP caucus lunch, asked the group which candidate they preferred to lead the Fed — current Fed governor Jerome Powell or Stanford University economics professor John Taylor.
“I think Taylor won, but he did not announce a winner,” Mr Scott said.
The President also mentioned current Fed Chairwoman Janet Yellen, but didn’t include her in the informal poll.
“I couldn’t tell which way he was going,” Senator John Kennedy said — read more
Dow Jones Newswires
2.50pm: Pet shop’s homegrown Amazon trump card
Pet care retailer and veterinary services provider Greencross believes it can withstand the entry of online retailing giant Amazon into the Australian market because its business has unique features.
Greencross chairman Stuart James says his company has the advantage of employing more than 650 vets and can provide a “one-stop” for pet owners seeking veterinary services, grooming salons, dog wash, pet insurance, pet hotel booking, dog walking and obedience training.
Mr James also says that Greencross has a large and loyal customer base, with more than 87 per cent of the group’s sales made on the group loyalty card, which provides the company with in valuable data on pet owners’ shopping habits.
“A lot has been made recently of the potential impact of Amazon on the Australian retail landscape,” Mr James said at the company’s annual general meeting in Wednesday.
“In response to this discussion, it is worth pointing out that our business has many unique features which differentiate us from both online and bricks-and- mortar competitors” — AAP
GXL last 2 per cent on $5.70
2.31pm: Mortgage Choice dodges board spill
Strong message sent to mortgage broker, Mortgage Choice as it narrowly missed the prospect of a spill of directors after being hit with a shareholder protest vote for the second year running.
At Mortgage Choice’s annual meeting this morning nearly 32 per cent of shareholders voted against the remuneration report. Given this was the second year running that more than 25 per cent voted against the remuneration report, a spill motion was put forward.
However investors declined to pull that trigger — with only 15 per cent voting for such a move. Mortgage Choice has replaced its chairman over the past year and changed the way that long term bonus payments are made to executives.
“My appointment was the first step in an ongoing process of board renewal,” chairwoman Vicki Allen told the meeting.
The latest is the fourth consecutive meeting Mortgage Choice has had its remuneration scheme blocked by shareholders, the broker last faced the prospect of a board spill in 2015 under similar circumstances.
MOC last up 1pc on $2.21
Eli Greenblat 1.49pm: Lew fires stats in Myer war
Any hopes of a lull in hostilities between retail billionaire Solomon Lew and department store owner Myer were quickly dashed this afternoon when Mr Lew’s Premier Investments sent out an epistle that compared the powering Premier (PMV) share price to the sickly Myer share price over the last eight years.
In a short statement led with the line “the numbers don’t lie’’, it shows Premier’s market capitalisation of $2.1 billion against that of Myer’s of $616 million — as well as the growing chasm between the performance of both share prices since October 2009.
“More than $2 billion of Myer shareholders’ funds destroyed,’’ The Premier statement says.
“Myer (MYR) shareholders want change, not more of the same.
“It’s time for Myer shareholders to be heard. We encourage long-suffering Myer shareholders to vote accordingly at the Myer AGM.’’
According to the graph in the Premier statement, Premier’s shares have enjoyed a total increase since October 2009 of 62 per cent against an 82 per cent decline in value for Myer shares over the same period — read more
Samantha Woodhill 1.25pm: We’re sorting sunk costs: Fletcher chair
Fletcher Building chairman Sir Ralph Norris has told The Australian that some of the company’s previous acquisitions haven’t paid off, as the company flagged a full-year loss for its buildings and interiors unit will report a full-year loss of $NZ160m.
“I think it’s fair to say that some of the acquisitions in the past were not good acquisitions and this board is having to live with those and sort those out,” he said.
“So from my perspective, not having been around when those acquisitions were made, I’m not well versed in what the rationale was behind those decisions but it’s fair to say that those acquisitions have not performed as well as what would have been expected.”
It comes after the company took a further $NZ125 million provision against problematic construction contracts, including Auckland’s international convention centre and the Justice Precinct in Christchurch — read more
FBU last down 5pc at $6.86
1.05pm: DATA: Weak CPI knocks dollar
Weak CPI data have pushed the Australian dollar down from 0.7780 to 0.7742.
Headline Q/Q CPI rose 0.6pc vs. 0.8pc expected.
Headline Y/Y CPI rose 1.8pc vs. 1.9pc expected.
The average of core CPI measures Q/Q rose 0.35pc vs. 0.5pc expected.
The average of core CPI measures Y/Y rose 1.85pc vs. 2pc expected.
Core CPI has been below the bottom of the RBA’s 2-3pc target band for almost two years.
Treasuries rose on the data release, the 3-year benchmark yield falling to 2.08pc from 2.13pc, while the 10y yield fell to near 2.77 from 2.81 — read more
12.55pm: Mortgage Choice cops fourth strike
Mortgage Choice has received a fourth consecutive strike against its remuneration report at the company’s annual general meeting in its North Sydney headquarters today, with over 25 per cent of shareholders voting against the scheme.
Shareholders also rejected Mortage Choice’s remuneration scheme last year by an overwhelming 78 per cent, the company narrowly avoiding a board spill on its second strike in 2015.
MOC last up 1.3pc on $2.24
12.30pm: Whitehaven eyes coal mine tick
Preshant Mehra writes:
Whitehaven Coal expects to lodge the draft Environmental Impact Statement (EIS) for its upcoming Vickery project in NSW in the first quarter of 2018. The east coast miner currently holds approval for a 4.5 million-tonne-per annum open cut mine at the site but plans to seek approval for 10 Mtpa production, Chairman Mark Vaile told shareholders.
“Our next major development is the Vickery Project, an already approved coal mine located in the Gunnedah basin on land that has previously been mined,” he said at the company’s annual general meeting on Wednesday — read more
AAP
WHC last down 1.1 per cent on $3.60
Michael Owen 12.20pm: Aged care abuse sparks probe
Nursing homes across the country will be subject to unannounced assessment visits under reforms by the Turnbull government following a national inquiry into federal agencies overseeing aged-care centres.
The review, to be released today by federal Aged Care Minister Ken Wyatt, was sparked by an abuse scandal at Adelaide’s state-run Oakden nursing home.
The review, led by former ACT chief minister Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman, was completed earlier this month.
It had inquired into the role of the Australian Aged Care Quality Agency, the Aged Care Complaints Commissioner and the Health Department in assessing the standards of residential aged care facilities — read more
11.55am: Treasury faith in eventual wage rebound
James Gylnn writes:
Treasury Secretary John Fraser has told parliament he remains confident wage growth will eventually accelerate as unemployment falls, but he also stressed that it “will take some time.”
“Just as wages slowed in response to the period of slower growth and slack in the labour market in recent years, we expect that a period of stronger growth and falling unemployment will lift wages in the next few years,” Mr Fraser, who also sits on the board of the Reserve Bank of Australia, said.
“This process will take some time and this is reflected in our forecast profile for wages,” he added — read more
Dow Jones Newswires
11.10am: DATA: What to expect from 3Q inflation
Headline CPI is expected to rise 0.8pc Q/Q and 2pc Y/Y.
A surge in utility prices is expected to be partly offset by weaker prices for petrol and vegetables.
The average of core CPI measures is expected to rise 0.5pc Q/Q and 2pc Y/Y.
If so, core CPI will have returned to the bottom of the RBA’s 2-3 target band in almost two years.
But most economists feel the RBA will wait for at least another two quarters before lifting interest rates from record lows.
10.58am: Starpharma surges on product approval
Australians will be the first in the world to access a new bacteria fighting gel after regulators approved the product for sale, a move that has boosted the share price of product developer Starpharma.
The gel, to be marketed as Fleurstat, treats bacterial vaginosis, which is the world’s most common vaginal infection and one that affects one in 10 Australian women.
The Australian innovation was developed by Melbourne-based biotech company Starpharma and chief executive Jackie Fairley said there was a desperate need for new, clinically proven therapeutics options for this common and persistent condition. She said the condition was associated with serious medical consequences and problematic symptoms if left untreated.
Shares in Starpharma increased in early trade today on the news and were as much as 8.2 per cent higher at $1.45.
Dr Fairley said the approval from the Therapeutic Goods Administration was not only significant for the Australian market but also internationally given there were many countries in Asia, the Middle East and South America where marketing approval was largely based on Starpharma’s home country registration.
SPL last up 7.5 per cent at $1.44
10.54am: ASX200 extends 4-week streak
Australia’s S & P/ASX 200 is up 0.2pc at 5909.2 after rising 0.3pc to 5919.9 in early trade, building on a 4 per cent rise over the last month.
It has been capped near the recent high of 5925.3 despite record highs of Wall Street.
Energy and materials stocks are getting a boost from the jump in commodities.
BHP is up 1.3pc, South32 is up 2.7pc and Beach has jumped 3.4pc.
But Seven Group has pared most of a 4pc rise that followed strong results from Caterpillar.
Fletcher Building is down 5.6pc in reaction to its results and CEO appointment.
Wesfarmers is down 2.3pc on disappointing sales and Dominos is off 2.1pc.
Banks are mixed and falls in Telstra, Woolworths and Transurban are restraining the index.
Ben Butler 10.45am: Court grants banks rate-rig extension
Trial of the corporate regulator’s rate-rigging case has been put off until next week to allow two of the banks pursued, ANZ and NAB, more time to finalise settlement agreements.
If the settlements are finalised as expected, Westpac will be left alone of the only of the three banks originally launched Federal Court action against for allegedly rigging the benchmark bank bill swap rate (BBSW).
Justice Jonathan Beach initially resisted calls from the parties to adjourn until Monday, saying he was ready to start hearing the case today.
“If I accedeto your request … we have wasted an entire week,” he said.
He said he would “reluctantly” adjourn the cases until next Monday at 10.15am — but if settlements were not in place by then he would push ahead with the trials against those banks the following morning.
However, counsel for ASIC, John Karkar, QC, said that failure to adjourn would put settlement talks in “considerable jeopardy” — read more
10.30am: 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)
10.40am: Sally Auld — Chief Economist, JPMorgan
11.00am: Live cross — Morgans
11.15pm: Ric Spooner — Chief Market Analyst, CMC Markets
11.30pm: Shane Oliver — Chief Economist and Head of Investment Strategy, AMP Capital
11.45pm: Live cross — Shaw and Partners
(All times in AEST)
10.25am: Still low-risk winners: Teh
It may be the most-hated bull market in history, but there are still some low-risk buying opportunities for income-focused investors, says Vertium Asset Management chief investment officer Jason Teh.
“Every second week you hear a bear market prediction, and that’s a healthy sign,” he told The Australian yesterday. “I’m not seeing ridiculous earnings multiples.”
The former Investors Mutual star and retirement income specialist is now running a $20 million portfolio of Australian shares for the Vertium Equity Income Fund.
Rosanne Barrett 10.14am: Houses safe, but units set to fall
Unit prices in most capital cities are likely to fall following unprecedented building while house prices will hold up over the next three years, in a growing divergence in the great Australian dream.
The yearly QBE Housing Outlook, to be released today, found unit prices in Sydney were forecast to fall 3.8 per cent by 2020, including a 0.6 per cent fall next year — expected to be the first price drop for units in the NSW capital since a slide of 0.1 per cent in 2008.
10.03am: ASX set to rise as industrials ready
Australia’s S & P/ASX 200 is expected to open up 0.4pc at 5922 based on overnight futures relative to fair value.
A close above 5906.9 would be the best close since May and above 5925.3 would be the best intraday high since May.
That follows fresh record highs on Wall Street amid strong gains in financials, industrials and materials companies.
3M surged 5.9pc and Caterpillar jumped 4.9pc on strong results and guidance.
Shares also got a boost from stronger-than-expected manufacturing data in the US and Europe.
Commodities were mostly positive with spot iron ore up 0.7pc, Brent crude up 1.5pc, copper up 0.4pc and nickel up 1.1pc, though gold fell 0.4pc.
BHP ADR’s equivalent close at $26.68 was 0.5pc above yesterday’s close in Sydney.
Focus turns to domestic CPI data at 11.30am (AEDT) ahead of US durable goods data tonight.
Stephen Bartholomeusz 9.58am: Wesfarmers’ grocery war breadcrumbs
By the time we get to the end of this financial year we’ll have a better insight into whether the supermarket price war has bottomed out or is still raging. Today’s first quarter retail sales report from Wesfarmers would suggest that Coles, at least, is still sacrificing growth in sales dollars for competitiveness.
While the headline numbers for Coles’ food and liquor sales were up 1.5 per cent to $7.97 billion, on a comparable stores basis the growth was only 0.4 per cent and, excluding liquor sales, 0.3 per cent.
That’s despite Coles managing director, John Durkan, saying that there was an increase in transaction numbers, unit growth and customer satisfaction.
Excluding the impact of significant fresh food deflation, he said that comparable food and liquor sales in the first quarter were in line with the trend achieved in 2016-17, when comparable stores sales growth was a modest one per cent.
With Coles still investing in its offer in price, availability and service it is unclear whether — as UBS recently posited — Coles is still in catch-up mode with Woolworths and the massive investment in price that Durkin’s counterpart Brad Banducci made to restore his group’s competitiveness or whether Coles is setting new pricing benchmarks — read more
WES last $42.73
Ben Butler 9.45am: NAB nears ASIC rate-rig deal
NAB was last night locked in talks with the corporate regulator over rate-rigging allegations, sparking hopes a deal will be announced to the Federal Court in Melbourne in coming days.
A deal with the NAB would leave Westpac as the last of the three banks originally sued by the Australian Securities & Investments Commission continuing to defend the regulator’s lawsuit — read more
NAB last $32.54
9.38am: Teva slashes Mesoblast stake
Bridget Carter and Scott Murdoch write:
Israeli pharmaceutical group Teva’s $40 million block trade out of Mesoblast last night cut the former’s stake in the medical research company to less than 5 per cent.
Teva inherited the 29 million shares it sold last night for $1.50 each (the stock closed at $1.63) when it acquired Cephalon in 2010. Cephalon had earlier bought a 20 per cent stake in the business — read more from DataRoom
MSB last $1.63
Michael Roddan 9.35am: Future Fund ‘won’t get super’
The federal government has no plans to wrest control of default superannuation assets from the wealth management industry and hand them to a public caretaker, according to Minister for Finance Mathias Cormann.
His remarks came during a Senate estimates hearing for the $135 billion Future Fund, where chief executive David Neal said many of the political risks that had previously pushed the sovereign wealth fund into large levels of cash holdings were now abating.
Eli Greenblat 9.25am: It’s war between Myer, Lew
Myer chairman Paul McClintock last night sharply escalated the war of words with its biggest shareholder, billionaire Solomon Lew, declaring Mr Lew’s conflicts of interest and “aggressive game” over the last month would disrupt the retailer’s board and its “New Myer” strategy if one of his representatives were made a director.
And in a pointed strike against Mr Lew’s fashion conglomerate Premier Investments, Mr McClintock scoffed at the suggestion that any of Premier’s directors could be tagged as truly independent if they were shoe-horned into the Myer boardroom, saying the idea of an independent Premier director was a “very difficult concept for me to get my mind around” — read more
MYR last $0.75
9.20am: Starpharma’s VivaGel granted passage
Starpharma shares could get another leg up today after VivaGel was granted marketing approval in Australia from the Therapeutic Goods Administration.
VivaGel will be marketed in Australia by Aspen Pharmacare as Fleurstat BV gel and will carry the VivaGel brand.
“The TGA approval is significant not only for the Australian market but also internationally as there are many countries in Asia, the Middle East and South America where marketing approval is largely based on Starpharma’s home-country registration,” the company says.
VivaGel BV is also approved in the EU and Starpharma is pursuing regulatory approval in the US.
The company says its marketing application to the US Food and Drug Administration is expected to be submitted shortly.
SPL shares last $1.34
9.03am: 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: Jun Bei Lui — Tribeca
9.10am: Mark Todd — Income and Investment Solutions, NAB
9.15pm: Beau Mulder — AFEX Australia
9.30pm: Chris Weston — Chief Market Strategist, IG
9.35pm: Jonathon Barratt Ayers — CIO, Alliance
9.45pm: Live cross — CMC Markets
10.00am: Evan Lucas — The Lucas Report
(All times in AEST)
9.00am: Analyst rating changes
James Hardie cut to Neutral; 12-month target price raised to $20.10 vs. $16 — Citi
BWX raised to Outperform; 12-month target price raised to $7.75 vs. $5.43 — CLSA
Adairs cut to Hold — Morgans Financial
Beacon Lighting cut to Hold — Morgans Financial
Comet Ridge initiated at Buy, $0.40 12-month target price — Shaw and Partners
Domino’s cut to Hold — Morgans Financial
Stockland raised to Outperform — Credit Suisse
8.50am: Caterpillar third-quarter profit surges
Caterpillar Inc.’s third-quarter profit surged on demand for construction equipment, topping Wall Street expectations.
The Peoria, Illinois-based company boosted its guidance, citing strong oil and gas markets in North America along with construction in China. Its shares surged, ending Tuesday up $6.56, or 5 per cent, to $138.24.
Profit nearly quadrupled to $1.06 billion, or $1.77 per share. Earnings, adjusted for restructuring costs, came to $1.95 per share. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of $1.22 per share.
Revenue surged 25 per cent to $11.41 billion while six analysts surveyed by Zacks expected $10.61 billion — AP
Note: Seven West Group (SVW) owns and operates Westrac, an Australian Caterpillar dealership.
8.45am: Wesfarmers delivers mixed first-quarter
Diversified market heavyweight Wesfarmers has delivered investors a mixed first-quarter update, booking a 0.3 per cent decline in sales from its flagship retailer Coles on the same period a year prior, while its coal unit recorded a 1.6pc drop in production to 3Mt on the same basis.
The company’s aggregate department store sales rose 3.5 per cent, backed by a 9 per cent increase in Kmart sales and a 7.8 per cent jump in that of Officeworks, however the total was weighed down by a 6.4 per cent fall in that of Target.
Wesfarmers said its coal production arm slowdown was lead by a 12.6 per cent comparable fall in that of its steaming grade output from high base, while coaking grade production rose 3.9 per cent to 2.2Mt — read more
WES last $42.73
8.20am: Fletcher’s NZ listing falls sharply
Fletcher Building has taken a further $125 million provision against problematic construction contracts, including the Auckland’s international convention centre and the Justice Precinct in Christchurch, and says its B+I unit will report a full-year loss of $160m.
Excluding the B+I loss, full-year earnings guidance for the rest of the group is $680m to $720m, suggesting full-year earnings including B+I could be as low as $520m.
Auckland-based Fletcher downgraded earnings twice last year as escalating construction costs and a lack of oversight on major building projects saw the B+I unit come under pressure.
Meanwhile, former UGL and Tenix boss Ross Taylor has been named as Fletcher’s new chief executive, starting next month.
At both companies he returned loss-making businesses to profitability, doubling the UGL share price in two years, Sir Ralph said.
A trading halt was lifted on Fletcher’s shares following Wednesday’s announcement which follows a review by KPMG.
Note: Fletcher’s listing on the New Zealand stock exchange fell over 5 per cent at the open — its ASX listing FBU last $7.22
7.15am: Aust. shares look set to open higher
The Australian market looks set to open higher after Wall Street made solid gains overnight.
At 0700 AEDT on Wednesday, the share price futures index was up 15 points, or 0.25 per cent, at 5,898.
Stocks on Wall Street rose as stronger-than-expected earnings results and forecasts from companies including 3M, Caterpillar and General Motors fuelled optimism about strength in the economy.
Locally, in economic news today, the Australian Bureau of Statistics is due to release the September quarter inflation figures.
In equities news, CIMIC is expected to release third-quarter results, while Coles, Bunnings and Officeworks owner Wesfarmers is slated to provide its first-quarter sales figures.
Meanwhile, Tassal Group, Stockland, Whitehaven Coal have annual general meetings today.
The Australian market yesterday ended the day slightly higher as strength among miners and utility companies offset weakness for the energy producers. The benchmark S & P/ASX200 was up 3.6 points, or 0.06 per cent, at 5,897.6 points, while the broader All Ordinaries index was up 5.3 points, or 0.09 per cent, at 5,962.5 points.
AAP
7.10am: Dow surges on earnings
The Dow Jones Industrial Average surged overnight, notching its best day since September.
Better-than-expected earnings results from Caterpillar and 3M, among others, helped support major indexes after stocks had fallen a day earlier. Strong results from US companies, as well as solid economic growth around the world, have underpinned stock markets and helped push them to record highs over the past year.
About 24 per cent of the companies in the S & P 500 have reported results for the third quarter so far, with this week slated to be one the busiest, according to FactSet. By the end of Friday, more than half of the major index’s companies will have reported results for the most recent quarter, FactSet says.
“We continue to see a strong improvement in earnings,” said Celia Dallas, chief investment strategist at Cambridge Associates. While valuations continue to be a concern, Ms Dallas cautioned that investors shouldn’t limit their exposure to US stocks too much yet. “US equities tend to be more defensive when you get into periods of stress,” relative to stocks elsewhere in the world, she said.
The Dow industrials gained 168 points, or 0.7 per cent, to 23442, above its previous closing high. The S & P 500 rose 0.2 per cent, while the Nasdaq Composite added 0.2 per cent.
Australian stocks are set for a positive start. At 7.15am (AEDT) the SPI futures index was up 13 points.
On Wall Street, shares of 3M jumped 5.9 per cent after the maker of Post-it Notes, Ace bandages and scotch-Brite cleaning pads reported higher profit and revenue that exceeded analysts’ expectations, while also raising its outlook.
Caterpillar, meanwhile, gained 5 per cent after the company posted stronger-than-expected revenue and profit growth and boosted its outlook for the year.
Together, the two companies contributed more than 140 points to the Dow industrials’ gain.
Dow Jones Newswires
7.05am: Iron ore climbs
The price of iron ore is up 2.3 per cent to $61.70, according to The Steel Index.
6.55am: Dollar loses ground
The Australian dollar is lower against the US dollar, which continues to gain ground against the major currencies.
At 6.35am (AEDT), the Australian dollar was worth US77.81 cents, down from US78.11 cents yesterday.
AAP
6.50am: Oil gains
Oil prices rose, helped by expectations for lower supply amid geopolitical risks and steady declines in US inventories.
Light, sweet crude for December delivery rose 16 cents, or 0.3 per cent, to $US52.06 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 5 cents, or 0.1 per cent to $US57.42 a barrel.
Crude prices have risen over the past few weeks following an independence referendum in Iraq’s northern, semi-autonomous Kurdish region. The move has led to clashes with Iraqi forces retaking the oil-rich Kirkuk area, throwing into question Kurdistan’s ability to export oil through Turkey and raising doubts about investments from big oil companies.
At the same time, President Donald Trump’s decision not to recertify Iran’s compliance with a 2015 international agreement to curb the Islamic Republic’s nuclear program has also supported oil prices. Mr. Trump’s decision has raised the prospect of fresh sanctions on Iran, which would likely disrupt its oil exports and reduce global supply.
Dow Jones
6.40am: European stocks rise
European stock markets were up overnight as Wall Street pushed back into record territory following strong earnings from several blue-chip companies, including Caterpillar and McDonald’s, traders said.
“Global equities are trading higher into the afternoon as investors await key trading updates” from major Dow Jones listed companies, said Accendo Markets analyst, Henry Croft.
In the eurozone, business activity across the single currency area slowed in October, a key survey showed, but job creation hit the fastest pace in a decade as the economic recovery in Europe stayed on track.
A purchasing managers’ index (PMI) compiled by Markit dipped to 55.9 in October after 56.7 in September, the group said in a statement.
Traders were looking ahead to tomorrow, when the European Central Bank is set to announce a big reduction in its financial stimulus support for a recovering eurozone economy.
The ECB began buying massive amounts of bonds in 2015 to fight the threat of deflation — a damaging downward spiral of prices and activity.
Since then, the state of the eurozone economy has improved, and the ECB last night said that households across the single currency bloc enjoyed easier access to credit in the third quarter of 2017.
Earlier, Tokyo’s Nikkei led another broad advance across Asian markets, with the index chalking up its 16th straight gain to extend an impressive record streak.
In Europe, London closed flat, Frankfurt edged up 0.1 per cent and Paris ended 0.2 per cent higher.
AFP
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