Trading Day: live markets coverage; Stocks finish in the red; plus analysis and opinion
The ASX has ticked lower after the US central bank’s decision to hike rates weighed on Wall Street and buoyed the local dollar.
And that’s a wrap for the Trading Day blog for Thursday, March 22.
5.05pm: Asian Stocks lift after Fed hikes
Asian stock markets outside China strengthened Thursday, after the Federal Reserve raised interest rates but stopped short of signalling a faster pace of increases for this year.
Shares in China fell after the Fed’s move prompted the People’s Bank of China and Hong Kong’s de facto central bank to raise rates, weighing on stocks in both markets.
The Nikkei Stock Average was 1 per cent higher in the afternoon session as traders returned to work after a holiday. Energy stocks led gains in Tokyo as crude oil prices rallied on a surprise decline in US oil inventories. Benchmark Brent crude futures were last up 0.1 per cent at $US69.10 a barrel.
South Korea’s Kospi gained 0.5 per cent while markets in Malaysia, Indonesia and the Philippines were relieved by the Fed decision. Stocks in Manila were up 1.1 per cent ahead of an expected central bank decision to leave rates unchanged.
Central banks in Taiwan and Indonesia are also due to meet later Thursday, with both expected to stand pat following the Fed’s move. The Bank of England also meets later Thursday.
Dow Jones
5.01pm: Local jobs wave appears to ebb
If the latest gains in Australia’s job market look like a wave for Aussie wages and prices to surf on, think again.
Australia’s job market continues to set a scorching pace for job creation, following the addition of more than 400,000 jobs to the economy in 2017. But progress toward full employment that could fuel inflation looks a lot cooler.
Figures for February, released by the Australian Bureau of Statistics on Thursday, showed that a 17,500 jump in new full-time positions wasn’t enough to stop unemployment ticking up to 5.6 per cent and measures of spare capacity in the job market rising.
The problem may not be the strength of the job-creation wave itself, but the number of people trying to ride it.
Dow Jones — read more
4.55pm: China warns US against tariffs
China warned the US against any measures that could harm both countries, as Washington prepares for punitive trade policies targeting Beijing.
“China absolutely won’t sit back and watch its legitimate interests being harmed,” the Ministry of Commerce said in a statement Thursday, vowing to take “all necessary measures” to defend its interests.
The ministry also said it rejects any acts by Washington that represent unilateralism and trade protectionism.
The US is set to announce punitive trade policies later in the day.
The administration is expected to highlight Chinese violations of U.S. intellectual-property rights, and to suggest tariffs on Chinese imports worth at least $30 billion along with restrictions on China’s ability to buy U.S. technology and hi-tech firms.
Dow Jones
Samantha Bailey 4.22pm: Stocks finish in the red
The local sharemarket ended the session slightly lower on the back of weak offshore leads, after the US Federal Reserve put interest rates up by 25 basis points.
At the close of trade, the benchmark S & P/ASX200 had lowered 13.070 points 0.22 per cent 5937.199 points. The broader All Ordinaries index had fallen 9.882 points or 0.16 per cent at 6043.199 points.
Morgans private client adviser Chris Macdonald described the losses in response to the US rate decision, both locally and on Wall Street, as modest.
“The market was relieved that they only expect three interest rate rises this year, hence the muted response,” he said.
“We saw quite a sharp fall in the US dollar, which flowed through to commodity prices.
“Fortunately we haven’t seen a wild swing in the markets, which is a good thing. In the short term, it will come down to the direction of the oil price, which has really been the major mover of markets in the last week.”
4.13pm: Asian stocks mixed
Shares were mixed in Asia after US stock indexes finished with small losses following the Federal Reserve’s hike in interest rates.
Japan’s Nikkei 225 index gained 0.5 per cent to 21,488.07 while the Kospi in South Korea added 0.5 per cent to 2,498.17. Hong Kong’s Hang Seng dropped 0.5 per cent to 31,267.45 and the Shanghai Composite index lost 0.8 per cent to 3,254.31. Shares were mixed in Southeast Asia.
Ben Butler 3.25pm: ‘I am a gambler, I have a gambling problem.’
The CBA kept pushing credit card increases onto a man with a gambling problem despite his pleas for help, the financial services royal commission has heard.
Giving evidence this afternoon, roofer David Harris, who is originally from England, said his credit card debt eventually ballooned to $31,000.
CBA today admitted that it should never have offered Mr Harris a final credit offer of $8000 — the maximum increase the bank offers — after he told its officers he had a gambling problem.
“That information was not in any way passed through” to CBA’s credit area, the head of the bank’s executive general manager of retail products, Clive Van Horen, told the commission.
An emotional Mr Harris told the commission he is now on a hardship plan with the bank, which he still owes $23,400.
He said that after he fell behind on payments he tried to get the bank to stop lending him money.
“I tried to reach out for help and I didn’t get any, I got the opposite, I got more credit increases,” he said.
“I tried telling them I had a problem.”
Michael Roddan 3.15pm: CBA most to lose from inquiry: Bell Potter
Of the big four banks, Commonwealth Bank will mostly likely lose the most if Kenneth Hayne’s royal commission overhauls the troublesome mortgage broking industry.
Bell Potter financial analyst TS Lim today warned clients any regulatory outcome from the year-long inquiry into banking and financial services would likely result in a drop in broker loans being sold to the major banks, along with higher compliance costs.
The royal commission in its first two weeks of hearings has revealed widespread home loan fraud among Australia’s biggest banks and mortgage brokers. CBA-owned mortgage broker Aussie Home Loans came under fire after executives revealed it lacked a system to detect loan fraud and outsourced the responsibility to other lenders such as Westpac, Suncorp and Bankwest.
Stephen Bartholomeusz 2.45pm: Nothing to fear from the Fed?
Financial markets’ responses to the US Federal Reserve Board’s first rate rise under new chairman Jerome Powell were curious and, at face value, contradictory.
The 25 basis point increase in the federal funds rate was already priced in, so the fact of the rise wasn’t going to move markets. US stockmarkets, which fell over the day, actually rose briefly after the decision while bond yields edged down and the US dollar fell.
It would appear that the first decision by the Powell-led Fed and his first press conference as chairman was interpreted by the markets as evidence that a Powell Fed will follow the same cautious and conservative course pursued under his predecessor, Janet Yellen.
That conclusion may have been drawn from the median projection in the forecasts by members of the Fed’s Open Market Committee of only two more interest rate rises this year. After seemingly “hawkish’’ comments by Powell about the outlook for the US economy earlier this year the odds on a fourth rate rise rose quite sharply.
The Fed’s statement overnight appeared to dispel that prospect.
2.16pm: Stocks turn negative
The local sharemarket has moved into negative territory, tracking US futures as nerves kick in ahead of President Trump’s expected tariff package.
Samanth Bailey 2.05pm: Sigma eyes flat organic growth in 2018
Pharmaceutical wholesaler Sigma Healthcare says it’s eyeing flat organic growth in 2018 as it delivered a slight full-year profit boost.
New legislation requiring a prescription for medications containing codeine, which came into force in February, combined with a small number of manufacturers taking some PBS products out of Sigma’s wholesale network, will likely offset the company’s organic growth, chief executive Mark Hooper has warned.
“While that impacts the broader Sigma business, we’re a bit more impacted by that because we have a reasonably prominent private label presence so the loss of codeine sales might hurt us there because we lose the manufacturing margin as well as the retail margin on that,” he told The Australian.
“We do expect some underlying growth organic growth over the next twelve months but I guess the combination of those things means that it’s going to be a relatively flat overall.”
For the full year to January 31, the company booked a net profit after tax up 3.5 per cent to $55.4 million.
1.50pm: Time to regulate tech firms: Zuckerberg
Facebook CEO Mark Zuckerberg says he believes it’s time to impose more regulations on technology companies as they play an increasingly important role in the world. But he isn’t spelling what kind of rules he would support beyond requiring clear disclosure about who is paying for online ads. Zuckerberg told CNN in an interview late Wednesday (US time) that it no longer is a question whether Facebook and other large tech companies should be more closely regulated. Instead, he says politicians need to work with companies to figure out what regulations make the most sense.
The pressure to impose more controls on influential tech companies such as Facebook, Google and Amazon has been building as their services and products become more dominant, making it more difficult for rivals to build alternatives. Zuckerberg only said he thinks it’s a good idea to require internet companies to disclose who is paying for online ads. That’s a proposal under review in Congress after Facebook acknowledged Russian agents financed political ads during the 2016 presidential campaign, information about which wasn’t disclosed until after the election.
AAP
Supratim Adhikari 1.40pm: Facebook to clamp down on rogue apps
Facebook founder and CEO Mark Zuckerberg has said that the social media giant will be clamping down on “rogue” apps that have been selling personal information of Facebook users to third party analytics firms.
“If we can’t protect people’s data we don’t deserve to do what we are doing,” he told CNN in an interview on Thursday (AEDT).
“Our responsibility is to make sure that developers like (Alexander Kogan) not getting the kind of access they can get.”
Speaking to CNN five days after the scandal hit the headlines, Mr Zuckerberg said that Facebook will notify the 50 million users whose data was sold to analytics company Cambridge Analytica.
“We need to tell everyone whose data has been affected by a rogue app,” he said.
“We need to make sure there are no Cambridge Analyticas out there, we will investigate every app and if we detect anything we will do a forensic audit.”
Facebook was aware of the Cambridge Analytica issue in 2015 and Zuckerberg said that the company should have been more upfront with users.
“Going forward when we will identify apps that do sketchy things we will tell people, I regret we didn’t do that at the time.”
1.30pm: Myer must shrink to survive: UBS
Most of the 63 Myer stores around Australia are likely to be at break-even and the veteran retailer must shrink to survive, a new analyst’s report says. The report from UBS says Myer needs smaller stores and fewer of them, but it is unclear if the struggling business can bear the costs of trimming its estimated $2.7 billion lease burden.
Myer flagged that only one of its stores was loss making when it unveiled a near half-billion dollar loss on Wednesday.
But UBS analysts Aryan Norozi and Ben Gilbert estimate a “large portion” of Myer’s stores are just breaking even as it loses market share to online players and international fast fashion retailers Zara, H & M and Uniqlo. “We believe Myer needs to shrink to greatness to address structural challenges and become a more targeted, nimble and profitable business,” the analysts said. “That said it is costly and we do not believe the balance sheet, as it stands today, can support this.” Myer slumped to a $476.2 million loss for the six months to January 27, driven by $515.3 million in writedowns of goodwill and brand names, following ongoing sales and profit declines.
The company said it was meeting its debt obligations, but analysts have warned that the size of Myer’s impairments puts it in a precarious situation. Analysts are also doubtful that Myer can return to sales growth any time soon after it reported a 3.6 per cent fall in sales’ revenue for the half. Premier Investments, Myer’s largest shareholder, accused the department store chain’s executive chairman Garry Hounsell of being short on details but “long on hype and false optimism”.
In a statement on Thursday, Premier disputed Myer’s claims of strong growth in its online sales, pointing to a slowdown in online trade during the second quarter and claiming that that decline was behind profit downgrades issued by the company in December and February.
Premier’s chairman Solomon Lew has reiterated his call for Myer shareholders to back his effort to oust the board in an extraordinary general meeting he is yet to call.
“Yesterday was surely the final nail — there can be no sensible argument mounted in defence of the Myer board,” he said.
AAP
12.45pm: Rising participation, high underemployment restraining wages — Westpac
While the February jobs data are consistent with solid jobs growth implied by business surveys, momentum has eased from well-above average levels in 2017, with the annuanlized 3-month average of 2.1pc now in line with Westpac’s forecast for the whole of 2018.
Moreover, while that pace is still faster than working age population growth of around 1.7pc annually, the recent experience has shown higher employment growth being met with rising participation, lifting the jobless rate to 5.6pc in February.
“As that is above estimates of full employment of around 5pc, and along with a still elevated underemployment rate at 8.4pc, slack in the labour market remains,” says Westpac economist Simon Murrary. “While that persists, we are unlikely to see a significant acceleration in wages.” AUD/USD has slipped from 0.7782 to 0.7756 since the release.
12.15pm: S & P/ASX 200 turns positive, tracking US futures
Australia’s S & P/ASX 200 has turned slightly positive, tracking a rebound in US stock index futures today. After initially falling as much as 1pc to a 5-day low of 5909.1 as a downgrade-related sell-off in banks magnified the negative reaction to slight falls on Wall Street after the Fed decision overnight, the Aussie benchmark now looks to be forming a bullish “hammer” pattern on the daily candlestick chart. S & P/ASX 200 last up 3 points at 5953.
Samantha Bailey 11.50am: Brickworks H1 profit drops
Construction materials company Brickworks has delivered a drop in first-half net profit despite record sales in its building products business unit.
The company unveiled a statutory net profit after tax down 6.8 per cent to $97 million, but underlying net profit after tax, which strips out one-off items, lifted 4 per cent to $115.6m for the half year ending January 31.
The company announced a fully franked interim dividend of 18 cents per share, up 5.9 per cent on last year’s interim dividend.
Total dwelling commencements were down 7.2 per cent for the period, but this is compared to the record peak in the prior corresponding period, the company said.
Group revenue declined $396.7m, down from $428.9m for the first half last year.
The company’s building products business unit booked a record sales revenue of $396.2m on the back of elevated demand on the east coast. Earnings before interest, tax, depreciation and amortisation of $53.6m, up 13.8 per cent on the same period last year.
Building products revenue for the period lifted 7 per cent to a record $396.2m, due to strong demand in New South Wales and Victoria, and came despite a decline in demand in Western Australia.
The company’s brick manufacturing business Austral Bricks delivered an 18.9 per cent increase in earnings for period while concrete masonry maker Austral Masonry earnings were lower, despite an 18.7 per cent increase in sales revenue to $52.0 million for the half, due to a slowdown in apartment construction in Brisbane and difficult conditions in North Queensland.
11.34am: Unemployment rate lifts to 5.6pc
Australia’s jobless rate unexpectedly rose to 5.6pc from 5.5pc as the workforce participation rate rose to 65.7pc vs. 65.6pc.
Employment growth of 17,500 was a touch below the 20,000 rise expected but this is not a bad outcome.
That’s particularly so because full-time jobs rose 64,900 while part time jobs fell 47,400.
AUD/USD dipped from 0.7782 to 0.7771 before stabilising, while the S & P/ASX 200 recovered from 5921 to 5931 and was last down 0.3pc at 5931.
Ben Butler 11.22am: Banker employs Sergeant Schultz defence
A senior ANZ banker giving evidence at the financial services royal commission has reached for the Sergeant Schultz defence, telling the inquiry he doesn’t know what went on at its former car loan business Esanda because he never worked there.
The royal commission is today examining misconduct at Esanda, which ANZ sold to Macquarie in 2015 for $8.2 billion.
Last month, following legal action brought against ANZ by the corporate regulator, the bank agreed to Federal Court orders under which it admitted that while it owned Esanda it broke responsible lending laws and paid a penalty of $5m, together with the Australian Securities and Investments Commission’s legal costs of $120,000.
ANZ chose the general manager of its small business bank, Guy Mendelson, to give evidence today about its car finance business.
However, Mr Mendelson has this morning told the commission he knows little about crucial details of Esanda’s business because he never worked for it.
His lack of knowledge appeared to echo the “I know nothing” catchphrase of the hapless Sergeant Schultz character, a German army officer responsible for oversight of prisoners of war during WWII in the 1960s American sitcom Hogan’s Heroes.
Mr Mendelson became responsible for asset finance, which includes car loans, in July 2015.
The bank sold Esanda less than four months later, on October 8.
During his evidence this morning, he repeatedly said he did not know the answers to specific questions about Esanda’s practices while it was owned by ANZ.
Asked by counsel assisting the commission, Albert Dinelli, how much dealers received as an “origination fee” for writing Esanda car loans, Mr Mendelson said: “I can’t comment because I don’t know.”
Pressed by Mr Dinelli on whether this fee was in the hundreds of dollars, he said: “I genuinely don’t know.”
And asked if customers were informed that the decision on whether or not to charge the fee was entirely up to the car dealer’s business manager, he responded: “I don’t know, I can’t comment.”
Mr Mendelson was also taken to a December 2014 letter ANZ wrote to dealers, in which the bank told them that if it failed to meet the bank’s requirements when providing credit it would come after them for any costs involved.
Mr Dinelli put it to him that one reading was that ANZ “expect you dealers to make sure everything is done to comply with responsible lending obligations”.
“To be quite honest I’m not 100 per cent sure how to read that paragraph, it’s very ambiguous,” Mr Mendelson responded.
Mr Mendelson told the commission steps had been taken to improve practices since he took over the asset finance division.
ANZ kicked 500 of 3000 brokers out of its network in late 2016 introduced a test they need to pass to remain accredited.
And in December last year it abolished “flex commissions”, which enable car dealers to jack up their commissions by charging customers a higher interest rate.
These are still allowed by ANZ’s rival Westpac, the commission heard yesterday — even though Westpac claims it wants them eliminated.
Flex commissions have been banned by ASIC, effective November 1.
11.15am: AMP trading volume spikes
AMP — like Suncorp — has also seen a spike in trading volume today.
Turnover in AMP shares is almost quadruple the 20-day moving average for this time of day.
AMP last up 0.4pc at $5.24.
11.06am: Employment data due at 1130
February labour force data today are expected to show a 20,000 rise in jobs and unchanged jobless rate of 5.5pc, with a steady participation rate of 65.6pc, according to Bloomberg.
Westpac expects a 25,000 rise in jobs, with business surveys suggesting continued solid employment readings in the near-term though it feels rising participation should keep unemployment steady.
NAB on the other hand is below the consensus for jobs this month expecting an 8000 rise. The survey will also include a quarterly update on labour under-utilisation — unemployment plus underemployment — last at 13.7 per cent.
The data are due for release at 1130 AEDT.
10.55am: Suncorp volume spikes to near triple average
Suncorp trading volume has spiked to almost triple its 20-day moving average for this time of day.
Shares are down 0.8pc at $13.56 after hitting a 2-week low of $13.52.
10.50am: JPM raises Nufarm to buy on growth potential
Nufarm has been raised to Buy from Hold and its target price increased to $10.50 vs. $9.00 at JP Morgan as the broker sees valuation support and strong growth potential for the crop protection business.
The broker notes that Nufarm has enjoyed strong sales momentum in core geographies despite little to no market growth in recent periods, while its performance improvement program has supported margins.
“Further growth opportunities exist in the form of Omega-3 canola commercialisation and the recent — and potentially further — acquisitions,” JPM analysts say.
“These should provide margin uplift as PIP benefits cease, although seasonal and regulatory risks remain.”
NUF shares have risen as much as 3.2pc to a 3-month high of $8.99 after surging 5.5pc after its results yesterday.
Last up 2.3pc at $8.9.1
10.35am: Stocks slide, CBA hit on rating cut
Australia’s S & P/ASX 200 has fallen as much as 0.7 per cent to a two-day low of 5909.1 in early trading, worse than a 0.2pc fall expected based on overnight futures.
While Wall Street fell only slightly after what was generally regarded as a “dovish hike” by the Fed because its 2018 interest rate projections were unchanged, the Australian market has been hit by a sell-off in the banks.
CBA is down 1.4pc after Bell Potter’s TS Lim cut his rating to Hold and trimmed his price targets for most banks as he expects a crackdown on their reliance on mortgage brokers after the Royal Commission.
But while the Materials and Energy sectors are getting a boost from the inventories-led surge in oil prices overnight, all other sectors are in the red,
The index now looks set to test chart support in the 5887-5900 area.
10.32am: Facebook’s Zuckerberg admits mistakes
Breaking more than four days of silence, Facebook CEO Mark Zuckerberg admitted mistakes and outlined steps to protect user data in light of a privacy scandal involving a Trump-connected data-mining firm. Zuckerberg said Wednesday that Facebook has a “responsibility” to protect its users’ data and if it fails, “we don’t deserve to serve you.”
Zuckerberg and Facebook’s No. 2 executive, Sheryl Sandberg, have been quiet since news broke Friday that Cambridge Analytica may have used data improperly obtained from roughly 50 million Facebook users to try to sway elections.
Facebook has already taken the most important steps to prevent such a situation from happening again, Zuckerberg said. For example, in 2014, it reduced access outside apps had to user data. However, some of the measures didn’t take effect until a year later, allowing Cambridge to access the data in the intervening months.
Zuckerberg acknowledges that there is more the company needs to do. In a Facebook post on Wednesday, Zuckerberg said it will ban developers who don’t agree to an audit. An app’s developer will no longer have access to data from people who haven’t used that app in three months. Data will also be generally limited to user names, profile photos and email, unless the develop signs a contract with Facebook and gets user approval.
Authorities in Britain and the United States are investigating the alleged improper use of Facebook data by Cambridge Analytica, a UK-based political research firm. Facebook shares have dropped some 9 per cent, lopping more than $50 billion off the company’s market value, since the revelations were first published, raising questions about whether social media sites are violating users’ privacy.
The head of Cambridge Analytica, Alexander Nix, was suspended Tuesday after Britain’s Channel 4 News broadcast hidden camera footage of him suggesting the company could use young women to catch opposition politicians in compromising positions. Footage also showed Nix bragging about the firm’s pivotal role in the Trump campaign.
Nix said Cambridge Analytica handled “all the data, all the analytics, all the targeting” for the Trump campaign, and used emails with a “self-destruct timer” to make the firm’s role more difficult to trace.
“There’s no evidence, there’s no paper trail, there’s nothing,” he said. In a statement, Cambridge Analytica’s board said Nix’s comments “do not represent the values or operations of the firm, and his suspension reflects the seriousness with which we view this violation.” Facebook itself is drawing criticism from politicians on both sides of the Atlantic for its alleged failure to protect users’ privacy.
AAP
Matt Chambers 10.23am: Swiss investigate Rio over potential bribes
Swiss prosecutors are investigating whether Rio Tinto or any of its subsidiaries paid bribes linked to the 2009 Oyu Tolgoi copper and gold mine in Mongolia, Reuters has reported.
The announcement comes as Bayartsogt Sangajav, the former Mongolian finance minister at the centre of joint Swiss and Mongolian investigations, denied that a $US10 million transfer to a Swiss bank account in 2008 was related to Oyu Tolgoi, whose 2009 investment agreement he was a signatory of, along with representatives of Rio and then operator Ivanhoe Mines (now known as Turquoise Hill and which later became a Rio subsidiary).
The Swiss Office of the Attorney-General is conducting a criminal proceeding on suspicion of bribery of foreign officials and money laundering over the transfer and have frozen the associated accounts.
“The Swiss Attorney-General’s office also confirms that its investigation is examining whether the mining company Rio Tinto or its subsidiaries have paid bribes potentially linked to the Oyu Tolgoi project,” the OAG said in an email to Reuters.
In a press conference in Mongolia overnight, Mr Bayartsogt said the money was transferred to him by an investor to support a business he had established, but would not give the investor’s name, Reuters said.
Turquoise Hill last week revealed the Mongolian Anti-Corruption Authority was investigating “possible abuse of power by authorised officials” during negotiation of the 2009 Oyu Tolgoi investment agreement that paved the way for Rio to build the $US11 billion Oyu Tolgoi copper and gold mine in the South Gobi desert.
9.52am: Dramatic scenes at banking inquiry
Proceedings at the banking royal commission are off to a dramatic start this morning.
As commissioner Kenneth Hayne took the bench at 9.45am, a man stood up in the public gallery and began accusing judges of the Victorian Supreme Court of complicity in finance industry wrongdoing.
He was escorted out of the hearing room by security.
9.40am: CBA cut on broker concerns: Bell Potter
Bell Potter’s highly rated banks analyst TS Lim has cut CBA to Hold from Buy, while also lowering its target prices for all the major banks plus Suncorp, Bendigo and Bank of Queensland after revising his earnings estimates to reflect recent home loan rate cuts and looming increases in regulatory and compliance costs as the royal commission pushes for more responsible lending practices — specifically in regard to mortgage brokers.
Mr Lim says ANZ should be least affected due to its lower portfolio balances and perceived absence of in-house broker/aggregator flow — while CBA should have the most downside risk from lower broker originated mortgage flows and higher regulatory and compliance costs.
He has raised Auswide Bank to Buy due to its greater cost efficiencies and stronger margins outlook following post-result management discussions. Expect some underperformance from CBA and possibly the entire banking sector on the back of this research.
9.22am: Broker rating changes
CBA cut to Hold — Bell Potter
Auswide Bank raised to Buy — Bell Potter
Nufarm raised to Overweight — JPMorgan
MMA Offshore restarted at Buy — Shaw & Partners
Ben Butler 9.15am: Bank inquiry looks to ANZ car loans
Today’s hearing is expected to kick off with evidence from Guy Mendelson, the general manager of ANZ’s small business bank. He will face questions on ANZ’s car loans, the current focus area of the royal commission.
After that it looks like we’ll move on to credit cards. There’s only two days to go and time is tight — counsel assisting will use much of Friday afternoon giving closing submissions for this round.
9.05am: Soul Patts profit slips
Washington H Soul Pattinson’s first-half profit has fallen 1.9 per cent to $146.2 million compared to $149m a year ago when the company benefited from one-off profit gains.
The investment firm, which holds major interests in companies including TPG Telecom, Australian Pharmaceutical Industries and Ruralco, says revenue for the six months to January 31 rose 25.5 per cent to $549.6m. Soul Pattinson lifted its interim dividend 1 cent to 23c, fully franked.
AAP
8.55am: Sigma profit drops 10.5pc
Pharmacies and drug supplier Sigma Healthcare’s full-year underlying profit has fallen 10.5 per cent to $59.9 million on decreased demand for its hepatitis C medication.
Net profit for the 12 months to January 31 rose 3.5 per cent to $55.1m because of a drop in one-off items, but underlying profit was hit by a fall in sales revenue to $4.1 billion from $4.4bn.
The company says it has appointed Goldman Sachs as financial adviser to assist with potential acquisitions that could diversify earnings.
AAP
8.35am: Stocks to watch
Brickworks: Building products group Brickworks releases its half year results on Thursday. Sigma Healthcare: Pharmacies and drug supplier, Sigma Healthcare’s full-year results show underlying profit dipped 10.5 per cent to $59.9m, while underlying EBIT came in at $90.7m. Final div of 0.025cps declared
Washington H Soul Pattinson: Investment group Washington H. Soul Pattinson releases its half-year earnings results.
CBA: Downgraded to Hold at Bell Potter; PT A$81.25
National Australia Bank: Believed to have held talks with Nippon Life about stake in or acquiring its funds management unit
BHP Billiton ADRs are up 2.6 per cent to $29.49 equivalent, a 2 per cent
premium to last close.
Rio Tinto ADRs are up 3 per cent to $68.56 equivalent, a 8.9 per cent discount to last Sydney close.
7.35am: Oil extends gains
Oil prices rose to the highest level in more than one month, bolstered by risks to global supply and an unexpected decline in US stockpiles.
Light, sweet crude for May delivery advanced $US1.50, or 2.4 per cent, to $US65.04 a barrel on the New York Mercantile Exchange, on track for the highest settle value since February 2. Brent, the global benchmark, rose $US1.75, or 2.6 per cent, to $US69.17 a barrel.
Overnight 9AEDT), the US Energy Information Administration reported that crude inventories declined by 2.6 million barrels in the week ended March 16, in contrast to analyst forecasts for a 2.4-million-barrel increase.
Dow Jones
7.25am: US stocks end lower after Fed
Wall Street stocks finished a volatile session modestly lower after the Federal Reserve lifted interest rates and pointed to a stronger US growth outlook following tax cuts.
The Dow Jones Industrial Average shed 0.2 per cent to 24,682.31. The broadbased S & P 500 lost 0.2 per cent at 2,711.93, while the tech-rich Nasdaq Composite Index declined 0.3 per cent to 7,345.29.
The Fed, as expected, raised its key lending rate, citing the improved US growth and employment outlook.
In its quarterly forecasts, Fed officials projected the benchmark interest rate would end this year at 2.1 per cent after two more hikes, unchanged from the December forecast, but would rise to 2.9 per cent at the close of 2019, signalling three possible hikes that year.
US stocks initially rallied on the Fed announcement, which suggested no plans to immediately accelerate the pace of tightening monetary policy.
But markets later pulled back during new Fed Chair Jerome Powell’s news conference in which he was asked repeatedly about risks to the economic outlook, including from a possible trade war between the US and China.
“Powell’s first press conference was largely uneventful, with the new chair sticking to a script similar to Yellen’s, thus sending a message of continuity despite new management,” said FTN Financial’s Chris Low.
“His answers were safe, offering little guidance on the committee’s thinking beyond what was already revealed.”
Petroleum-linked shares jumped as oil prices rallied on data showing a drop in US oil inventories. Dow members Exxon Mobil and Chevron rose 1.4 per cent and 2.2 per cent respectively.
AFP
7.20am: RBNZ holds rate
New Zealand’s Acting Reserve Bank governor Grant Spencer has kept the official cash rate unchanged at 1.75 per cent and continued to signal that rates will remain on hold due to the lack of inflationary pressure.
“Monetary policy will remain accommodative for a considerable period,” Mr Spencer said.
“Numerous uncertainties remain and policy may need to adjust accordingly.”
All 13 economists polled by Bloomberg had predicted the official cash rate would stay unchanged, with the median expecting the bank to stay on hold until at least 2019.
AAP
7.15am: ASX set to dip at open
The Australian share market is expected to open slightly lower after the US Federal Reserve raised its interest rate for the first time this year.
At 7am (AEDT), the Australian share price futures index was down eight points, or 0.13 per cent, at 5,926.
In the US, Wall Street stocks rose, after the Fed made the announcement that was widely expected, and flagged the possibility of more rate hikes later this year.
The Australian share market yesterday closed higher on a day of light trading volumes ahead of the Fed decision.
The benchmark S & P/ASX200 was up 13.9 points, or 0.23 per cent, at 5,950.3 points, while broader All Ordinaries index was up 12.3 points, or 0.2 per cent, at 6,053.1 points.
In economic news today official jobs figures for February will be released.
In equities news, pharmacies and drug supplier Sigma Healthcare releases its full year results, and building products group Brickworks releases its half year results.
AAP
6.50am: Dollar rallies after Fed
The Australian dollar has rallied almost one US cent, after the US Federal Reserve raised its interest rate for the first time this year and paved the way for more rate hikes later this year.
At 6.35am (AEDT), the local currency was worth US77.74 cents, up from US76.96 cents yesterday.
The US central bank raised its federal funds rate as expected, and forecast at least two more hikes for 2018, signalling growing confidence that tax cuts and government spending will boost the economy and inflation.
AAP
6.40am: Tariff breaks signalled
The Trump administration said it is in close talks with several allies and trading partners on exempting them from US tariffs on steel and aluminium, adding that some countries will face little threat of paying the duties while the negotiations are under way.
US trade representative Robert Lighthizer, in the Trump administration’s most expansive comments to date, told a House committee that the US is negotiating with Argentina, Australia, and the European Union and will soon begin discussions with Brazil. Mr Lighthizer also indicated exemptions also may be in line for Canada, Mexico and South Korea, depending on the progress of broader trade negotiations with those nations.
The tariffs — 25 per cent on steel and 10 per cent on aluminium — are set to take effect on Friday, but the talks over exemptions are likely to continue well into next month.
Mr Lighthizer didn’t specifically identify which countries would gain temporary or permanent exemptions, but the trade tsar made it clear they were on the table:
“During the course of that process, with respect to certain countries, the tariffs will not take effect,” Mr Lighthizer told the Ways and Means Committee. “Our hope is to get these things resolved by the end of April.”
Dow Jones
6.35am: US stocks give up gains
US stocks swung between small gains and losses after the Federal Reserve raised interest rates and reiterated plans for two more increases this year.
in late trade the Dow Jones Industrial Average was up 25 points, or 0.1 per cent, at 24,752, after earlier rising as much as 250 points immediately following the Fed decision. The S & P 500 climbed 0.1 per cent, while the Nasdaq Composite was down 0.1 per cent. All three indexes swung between gains and losses for the second straight session following sharp declines to start the week.
Australian stocks are tipped to edge lower at the open. At 6.30am (AEDT) the SPI futures index was down 10 points.
The yield on the benchmark 10-year US Treasury note climbed to 2.909 per cent, according to Tradeweb, from 2.881 per cent Tuesday. Bond yields rise as prices fall. The WSJ Dollar Index, which tracks the US currency against a basket of 16 others, declined 0.7 per cent.
Unease over a pick-up in inflation leading to a quicker-than-anticipated pace of rate increases contributed to last month’s stockmarket correction. Some investors had feared the Fed would raise rates four times in 2018, but the central bank reiterated plans for three total this year. Still, more officials now think four increases might be necessary, and the Fed also marked up slightly the estimate of interest rates it expects to prevail over the long run.
Some investors worry that higher borrowing costs will slow corporate activity and push up Treasury yields, making stocks less attractive. The Fed statement could comfort some analysts for now who wanted to see the central bank stay on a gradual path, though the longer-term concerns remain, said Michael Hans, chief investment officer of Clarfeld Financial Advisors.
“Markets are trying to seek out a little bit of direction,” Mr. Hans said. “It’s a bit premature to get the pulse of the market to see if this is a considerable benefit for stocks.”
Analysts were tracking new Fed Chairman Jerome Powell’s comments during his press conference for further hints about his long-term outlook for rates.
Stocks rose earlier in the session after US trade representative Robert Lighthizer told politicians that several key US allies and trading partners won’t face steel and aluminium tariffs until negotiations on possible exemptions wrap up next month.
Worries that protectionist trade policies could spread following the US tariffs expected to take effect Friday and crimp global economic growth have made some money managers anxious in recent weeks. The White House is expected to announce a new raft of punitive measures aimed at China, including levies worth at least $US30 billion.
The Stoxx Europe 600 fell 0.2 per cent, with the index’s banking sector among the worst performers.
Trading was quiet in Asia, partly because of a Japanese public holiday. Hong Kong’s Hang Seng index fell 0.4 per cent, while China’s Shanghai Composite Index was down 0.3 per cent.
Dow Jones Newswires
6.20am: Fed raises rates
The Federal Reserve is raising its benchmark interest rate to reflect a solid US economy and signalling that it’s sticking with a gradual approach to rate hikes for 2018 under its new chairman, Jerome Powell.
The Fed said it expects to increase rates twice more this year.
At the same time, it increased its estimate for rate hikes in 2019 from two to three, reflecting an expectation of faster growth and lower unemployment.
The central bank boosted its key short-term rate by a modest quarter point to a still-low range of 1.5 per cent to 1.75 per cent and said it will keep shrinking its bond portfolio.
AP
6.05am: Dollar lower, markets ‘tepid’ before Fed
The dollar dropped and stock markets were mixed ahead of a meeting of the US Federal Reserve and comments from its new boss Jerome Powell.
The Federal Reserve was widely expected to announce the first of at least three US interest rate hikes this year as the central bank works to head off inflation.
In Europe, London’s FTSE 100 index closed down 0.3 per cent.
In Paris, the CAC 40 slid 0.2 per cent while Frankfurt’s DAX 30 finished flat. Fears that the US central bank will embark on a sharper pace of rises than previously expected have rattled markets worldwide since the start of February, as traders contemplate the end of a decade of cheap cash that has fired an equities rally.
AFP
May rate cut ‘locked in’; ASX plots strong finish before Anzac Day break
Westpac's Luci Ellis predicts rate cuts in May, Aug, Nov. Miners lead local gains. Mixed Asian markets reflect Trump trade uncertainty amid softening stance on China.
ASX 200 mostly erases April tariff losses; gold miners dive
Trade deals optimism rises as US President Donald Trump softens stance on China, Fed chair Jerome Powell. Paladin top gainer. Safe-haven gold pulls back from its record high.