Markets Live: Shares slump
4:06pm: That’s it for Markets Live today.
You can read a wrap-up of the action on the markets here.
Thanks for reading and your comments.
See you all again tomorrow morning from 9. Upvotes:0 Downvotes:0 Copy Link
4:03pm: Local shares fell on news that Qantas will slash 5000 jobs and halt spending, and fell further after official data showed new business investment is declining more than expected.
The benchmark S&P/ASX 200 index lost 26.1 points, or 0.5 per cent, on Thursday to 5410.9, with the broader All Ordinaries index also shedding 0.5 per cent to 5420.3. All major sectors finished in the red, with industrials the hardest hit following heavy falls in Qantas, Transfield Services and ALS Ltd.
Australian shares took a mixed lead form offshore after stockmarkets in the United States closed marginally higher while shares in the United Kingdom and Europe were mostly lower.
The local currency and stockmarket both moved lower after ABS data showed business spending fell 5.2 per cent in the December quarter. It was a bigger decline than the market expected. More worryingly, the downturn in capital expenditure looks set to worsen with a measure of business spending intentions 17.7 per cent lower than the same period a year earlier. Forecasts for mining investment are down 25 per cent.
Speaking generally about the trend for large companies to slash jobs and rein in spending, CIMB equity strategist Shane Lee shrugged off concerns the tactic could limit future growth.
In the short-to-medium term cutting labour costs is an effective way to drive productivity growth. Remaining staff increase their output per hour and by the time demand growth improves to a point where the lower staffing levels are no longer sufficient firms are in a better position to afford to start hiring again, Mr Lee said.
The downside to the broader picture is that current corporate cost-cutting trend puts pressure on the unemployment rate.
Read more. Upvotes:1 Downvotes:0 Copy Link
3:56pm: The yuan has gone from being the most attractive carry trade bet in emerging markets to the worst in the space of two months as central bank efforts to weaken the currency cause volatility to surge.
The exchange rate tumbled the most since 2010 on Tuesday, losing money for investors who borrowed US dollars to buy yuan, amid speculation the People’s Bank of China was intervening to deter one-way bets on currency gains.
‘‘A lot of investors globally were invested in the yuan because of the interest-rate differential and the low volatility,’’ said Rajeev De Mello, head of Asian fixed income at Schroder Investment Management. ‘‘All of a sudden, the low volatility part of the argument is no longer there.’’
An unwinding of the carry trade may spur a slide in the yuan, which is set for the biggest monthly decline since the government unified official and market exchange rates at the end of 1993.
Deutsche Bank, the world’s largest foreign-exchange trader, estimated this week that bullish bets on China’s currency amount to about $US500 billion.
Dollar-funded carry trades in the yuan lost 1 per cent this year, compared with a gain of 5.8 per cent in the Indonesian rupiah and a return of 2.1 per cent in the Brazilian real, according to data compiled by Bloomberg.
The trades involve borrowing funds in a nation with low interest rates to purchase higher-yielding assets elsewhere. Upvotes:0 Downvotes:0 Copy Link
3:40pm: Time for the best and worst, and there were many more candidates for the latter, with 134 stocks in the ASX 200 losing ground, and only 41 recording gains (the balance were flat).
Fund manager Henderson joined its peers such as Perpetual (also in the top 10 today) in recording solid earnings and having its share price bid higher as a result.
Fairfax was up 2.2 per cent and is now at 94 cents (cmon $1!), while QBE also continued its long climb back up (see post at 12:37).
Transfield Services earnings took the shine off the stock, while mining services companies ALS and NRW plunged.
The Qantas update from management today went down like a lead balloon, while Wotif.com continued to shed market cap.
Best and worst performers in the ASX 200 today. Upvotes:0 Downvotes:0 Copy Link
3:32pm: Despite today’s real capex spend for Q4 coming in weaker than expected, UBS hold its 0.7 per cent growth forecast for next week’s GDP, but sees some modest downside risk:On the outlook, the current year 13/14 continues to hold up better than people expected, at $167 billion this implies 1 per cent growth into mid-14.However, the 14/15 took a deep dive to $125 billion, implying -7% using realisation ratios & re-weighting to our GDP accounts (our preferred) or -17% on a simple 1st /1st (though this approach mis-guided for 13/14).The question is whether the recent jump in business confidence signals some improvement ahead.Bottom-line, rate cut bears will be emboldened by this data and the market will be trimming the capex outlook....it seems clear theres no rate hike this year as 40% of forecasters still expect.
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3:31pm: The sharemarket has closed lower, pulled down by falling commodity prices and disappointing local business investment data.
The S&P/ASX200 fell 25.6 points, or 0.5 per cent, to 5411.4, while the broader All Ords lost 26.0 points, or 0.5 per cent, to 5421.0.
Among the sectors, materials slumped 0.9 per cent, industrials lost 1.4 per cent, while financials slipped 0.2 per cent. Upvotes:0 Downvotes:0 Copy Link
3:13pm: Heres an interesting chart from Perpetual, drawn from a research note where its used to show that the price recovery in major sharemarkets has run well ahead of earnings recoveries.
Where there has been some uptick in earnings it has been in the US and Japan.
But perhaps more interesting is in China, where earnings have grown in the mid-teens percentage points since September 2011, while share prices have barely budged.
In Australia, earnings have gone backwards over the period, whereas the stockmarket is up by over 30 per cent.
Market rises from here are likely to reflect upgrades to global earnings growth, says Perpetuals Matt Sherwood.
Stocks exposed to the improving US consumer should be well placed as household budgest gradually improve, he says.
Domestically, companies exposed to the robust Australian housing market recovery, and likely increase in infrastructure spending in the May federal budget, are also well placed as [previous] RBA rate cuts continue to filter through to domestic spending.
China is the only major sharemarket where price growth hasnt kept up with earnings. Upvotes:0 Downvotes:0 Copy Link
3:11pm: With gold up more than 10 per cent since the beginning of the year, ANZ has upped its price forecasts:A moderation in the strength of US data has kept the USD and US bond yields capped, boosting gold prices. This has increased investor demand for gold with greater inflows into ETFs and long positions on Comex.Our profile for a trough in the gold price in Q1 14, followed by a steady recovery remains unchanged, but we have increased our end Q1 target for gold to USD1,280/oz (from USD1,150/oz).Near term, we are mildly bearish towards gold. Two weeks ago we were biased for a push higher to target USD1,365/oz, but the sharp decline in the Shanghai gold premium and drop-off in physical demand makes it less likely we will test this level.
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2:51pm: Shipbuilder Austal expects to meet its full year revenue target after reporting a 76 per cent increase in first half profit.
Austal lifted net profit to $9.5 million in the six months to December 31, from $5.4 million in the previous corresponding period.
Revenue increased by 30 per cent to $507 million, due to increased production activity on vessels for the US Navy, and the Cape Class Patrol Boat program for Australian Customs.
Austal shares are flat at 88 cents. Upvotes:0 Downvotes:0 Copy Link
2:28pm: Losses from Woolworths’ home improvement business, Masters, rose to around $33 million in the December quarter, taking losses for the first half of 2014 to at least $80 million.
Figures released by Woolworths’ US partner, Lowe’s, on Wednesday night show that the world’s second-largest home improvement retailer lost $US11 million from its one-third stake in the joint venture in the three months ending January.
This suggests that the joint venture lost between $33 million and $36 million in the three months ending December, up from $29 million in the previous December quarter but an improvement on the $49 million loss in the September quarter, according to analysts.
The latest losses are expected to be confirmed when Woolworths releases first half earnings on Friday.
Analysts expect Australia’s largest retailer to report an underlying net profit around $1.34 billion, up 7 per cent, underpinned by 5.8 per cent group sales growth and 6.2 per cent earnings growth from the key food and liquor business.
This would be in line with Woolworths’ full year net profit growth guidance of 4 to 7 per cent and might prompt Woolworths to lift the bottom end of its guidance range to between 5 and 7 per cent.
Last week Matt Tyson, the British hardware veteran charged with the task of turning around the loss-making business, told The Australian Financial Review the division was on track to break even in two years.
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2:00pm: Its airline day, so hows this for some really hard-core, no-frills competition:
Ryanair has flagged it will offer flights to the US for $15 when it eventually buys the long-haul aircraft it needs.
Michael O’Leary, the airline’s chief executive, told the Irish Hotels Federation conference in Meath that he would offer tickets to New York and Boston for €10 ($15). Flights back to Europe would cost €7.30.
However, he admitted that passengers would pay extra for everything from meals to baggage.
The flights would leave from up to 14 major European cities to 12-14 destinations in the US.
“We can make money on 99 cent fares in Europe,” O’Leary said. “Not every seat will be €10 of course, there will also need to be a very high number of business or premium seats.” Upvotes:0 Downvotes:0 Copy Link
1:48pm: Long time market darling ALS has shown that it is not immune to weak market conditions, with its December quarter net profit of $44 million well short of earlier expectations of an unchanged net profit of $47 million earned in the September quarter.
The company had previously refused to give any forecast for December quarter trading. It now expects the year to March net profit to come in at $160 to $170 million, which indicates the final quarter net profit could fall to just $32 million.
The shares are down 10.3 per cent at $7.54. Upvotes:0 Downvotes:0 Copy Link
1:37pm: Time for a look around the region, where shares in most countries look a mite better than they do here:Japans Nikkei is 0.1 per cent lowerHong Kongs Hang Send is up 0.5 per centChinas Shanghai Composite index is 0.8 per cent higherTaiwans TAIEX has gained 0.4 per centKoreas KOSPI is up 0.2 per centThe Thai Stock Exchange is up 0.1 per centIndonesias Jakarta Composite is 0.2 per cent higherThe Kiwi NZX 50 is 0.4 per cent down.
‘‘The markets are in this holding pattern again, waiting for some new developments,’’ says Stephen Halmarick, head of investment markets research at Colonial First State Global Asset Management. ‘‘The base case is still that the global economy grows more strongly this year than it did last year but there’s certainly some risk around that.
A slowdown in China, risks in other emerging markets and questions about how strong the recovery is in the US are enough to keep everybody’s minds occupied.’’ Upvotes:0 Downvotes:0 Copy Link
1:00pm: In recent years there have been two great influences on the Aussie dollar - quantitative easing and China.
Before the announcement by the US Federal Reserve that it would start winding back its QE program, it was the easy money that was driving investors to look for yield and return, and the local currency benefited.
So even as Chinese economic growth started to ease - the iron ore price is a proxy for that, you can see the dip in the back half of 2011 - the Aussie stayed high.
Now the Aussie looks to be once again tracking Chinese growth - and the iron ore price - rather than easy money.
If that trend continues, and with Chinas economy more likely to slow than speed up in the short to medium term, our dollar should continue to come under pressure.
The Aussie and the iron ore price - back together again Upvotes:0 Downvotes:1 Copy Link
12:08pm: Alan Joyce is spot on when he says the $252 million loss reported by Qantas is unacceptable and unsustainable, Adele Ferguson writes in a comment:
Shareholders obviously think so too, with the share price plunging after the company released its long-anticipated half year results.
The problem is Joyce is yet to outline the full details of a big strategic review, which was expected today.
Will its frequent flyer business be floated? What other assets might be sold besides the terminals? And most importantly, how will unions and the Abbott government react?
Qantas has announced 5000 jobs will go over the next three years, shrinking the workforce to 27,000. It will also call for a wage freeze across the company.
How wage freeze discussions will go down will be interesting given the carrier has 14 different union groups and 54 enterprise bargaining agreements, each of which are open for negotiation at various times. It will be interesting to see how the unions react and whether it triggers industrial action.
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12:01pm: US home prices have been rising steadily for more than year, with the most recent Case-Shiller index reading showing the biggest year-over-year increase in nearly a decade.
But that doesnt mean that it is a bad time to buy.
According to a just-published analysis of the US residential property market from Trulia Chief Economist Jed Kolko, home ownership is 38 per cent cheaper than renting nationally and in all of America’s 100 largest metro areas. And his assumptions are fairly conservative.
Read more at CNN Money.
Home prices are up, but its still cheaper to buy than rent. Upvotes:0 Downvotes:1 Copy Link
11:52am: More on those less than impressive capex numbers from this morning (see post at 11:39).
The figures mean investment growth is going to be negative for this financial year, and likely for the 2014-15 financial year as well, NAB senior economist Spiros Papadopoulos said.
Its a very soft report. The fall in the fourth-quarter puts some downside risk to our GDP forecasts, Mr Papadopoulos said.
But more disappointing was the first estimate for 2014-15, which came in 17 per cent lower than the same time last year for the first estimate for 2013-14.
So it obviously just highlights the very weak investment outlook that we expect to see over the next 12 to 18 months, and that investment growth is going to be negative in the current calendar year and in the next financial year, which we expect will mean that higher unemployment lies ahead.
Mr Papadopoulos said hopes of a rise in the non-mining sectors as resources investment peaks had not materialised.
Although there is a small increase in the other industries components, I think it is up around 0.4 per cent on this time last year, it is not going to fill the hole of the $25 billion or so thats been lost in the mining [capital expenditure] plans compared to this time last year, he said. Upvotes:0 Downvotes:0 Copy Link
11:42am: Sure, investors love dividends, but this may be going too far.
Mining services contractor MACA has made the bizarre move of declaring a 30¢ a share special dividend, while raising equity to prop up the company’s balance sheet, reports the AFR’s Street Talk column.
MACA went into a trading halt this morning as Perth broker Hartleys started contacting institutional investors for the equity raising.
The $59 million offer for 26.2 million shares was priced at $2.25 each; a skinny 5 per cent discount to the weighted average of its last trading day.
But there was another kicker for prospective investors.
Each share issued would be entitled to a 30¢-a-share special dividend to be announced on Friday.
The move was explained as a way to release franking credits in a termsheet sent to prospective investors.
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11:37am: QBE shareholders have finally had something to smile about in recent days.
The recent share price moves have been impressive, but not as impressive as the falls in December.
Maybe some more upside on the way?
JP Morgan is the latest broker to upgrade the stock - to overweight - with the consensus still a hold, but creeping higher.
QBE - OMG! Upvotes:1 Downvotes:0 Copy Link
11:27am: The market reaction to Alan Joyce press conference #qantas pic.twitter.com/ite0BBCJbV— Simon Cullen (@Simon_Cullen) February 27, 2014 Upvotes:0 Downvotes:0 Copy Link
11:22am: Time to take a look at the best and worst so far, and funds management group Henderson is up 4.7 per cent on some good earnings, as is Whitehaven Coal.
QBE continues its - can we call it astonishing? - run, up another 2.7 per cent.
More action in Transfield Services shares, this time in a downwards direction, while the story of the day - Qantas - is 7.5 per cent lower, although it has been down as far as 9.5 per cent today.
Best and worst performing stocks in the ASX 200 around midday. Upvotes:0 Downvotes:1 Copy Link
11:07am: Shareholders in BHP Billiton and Rio Tinto may be in for a windfall of almost $8 billion through share buybacks and/or special dividends, if JPMorgan analysis is on the money.
BHP, which is likely to move first as early as its full-year results in August, could support a buyback of about $3 billion, while Rio Tinto, which is more likely to wait until its full-year 2014 results next February, could support a $4.75 billion buyback in the 2015 financial year, JPMorgan’s mining analyst team has calculated.
BHP, set to reach its $US25 billion net debt target by the end of June, is likely to find an off-market buyback in Australia is a more cost effective way of returning funds to shareholders.
BHP also has the potential to improve returns through portfolio rationalisation, though just what impact that would have is difficult to say without knowing the deals, JPMorgan said. It identifies more than $US35 billion of assets that could arguably considered non-core, including $US5.8 billion of petroleum assets, $US2.9 billion of copper assets and almost $US8 billion of coal assets, as well as the sidelined aluminium, manganese and nickel divisions. Upvotes:1 Downvotes:0 Copy Link
11:02am: Residential developer Peet has forecast momentum in the new housing market to continue build this year after its interim profits rose sharply on increased lot settlements and rising margins.
Peet reported an after-tax profit of $14.5 million for the six months to December 31, compared with a $1 million profit in the corresponding period a year ago.
A full-year dividend is expected to be reinstated for fiscal 2014.
The result was driven by a 31 per cent rise in revenue to $119.4 million as a result of lot settlements rising 85 per cent to just over 1500 and with earnings margins rising from 17 per cent to 23 per cent.
Sales picked up at its wholly owned Craigieburn project in Melbourne and Baldivis development south of Perth, as well as from projects tied to CIC Australia, the property business in which Peet acquired a controlling interest in May last year.
Peet managing director and CEO Brendan Gore said the result was in line with expectations and the indications were positive for further improvement in the second half.
Peet was particularly bullish on the outlook for Western Australia and Victoria, noting that there had been increased inquiries and a positive trend in sales volumes as a result of improving market conditions and that it had responded with “significant investment in the development and construction of new lots”. Upvotes:1 Downvotes:0 Copy Link
10:55am: Optus chief executive Kevin Russell will leave the telecommunications company at the end of next month, less than two years after taking on the role.
Former chief executive Paul O’Sullivan, who is currently SingTel’s group consumer chief executive, will act as an interim head for Optus until a replacement for Mr Russell is found.
It is understood that Mr Russell resigned and was not forced out by the board. He had privately flagged to the company his intentions to leave the company some time ago. Upvotes:0 Downvotes:0 Copy Link
Capital expenditure expectations have come in lower than expected.
10:39am: Business spending expectations for the three months to December have fallen by greater-than-expected 5.2 per cent, as the mining investment boom continues to fall from its peak.
The consensus forecast was for a 1 per cent decline.
The Australian dollar slipped to its lowest level since February 10, falling more than half a cent to US89.19c.
The first estimate of 2014-15 capital expenditure expectations, which analysts said would give a sense of the recovery in the non-mining sectors of the economy, came in at $124.9 billion, according to the ABS.
The result was below consensus forecasts of $139 billion.
The fifth estimate for companies spending plans in this financial year was $167.1 billion, a 0.8 per cent increase from the fourth estimate.
There were very poor numbers across the board, JP Morgan economist Tom Kennedy said.
The key takeaway for the RBA is when you look at sectors outside mining, they were also pretty weak. So investment intentions in both the manufacturing and other selected industries - both of those were quite soft and quite weak.
So you are not really seeing that rotating and pick-up in growth outside the mining sector, and we think that is going to be a worry for the RBA. Upvotes:0 Downvotes:0 Copy Link
10:30am: Big US fund manager Wellington Management has spent $24 million buying extra shares in struggling wine group Treasury Wine Estates, to lift its stake to 6.79 per cent, from 5.73 per cent.
Wellington, which is based in Boston in the US, scooped up the extra shares late last week and early this week, buying tranches worth $10 million, $3.5 million and two lots of about $5 million each.
Treasury, the owner of brands including Penfolds, Wolf Blass, Lindemans, Rosemount, Seppelt and Saltram, announced poor first-half results on February 20 and the appointment of food executive Mike Clarke as chief executive after a six-month search for a new boss.
Treasury shares have made small gains in the past few days and are trading at $4.07. This compares with below $3.50 early this month just after Treasury revealed a $40 million profit downgrade for 2013-14 because of a poor performance in December in Australia and China.
Treasury’s first-half profits in 2013-14 halved to $25.7 million when an $80.5 million tax benefit from a ruling by authorities about de-mergers was excluded. Upvotes:0 Downvotes:0 Copy Link
10:26am: Seven Group has delivered an interim result worse than the predicted 30 per cent to 40 per cent decline in underlying profit it flagged to the market back in November.
The company has reported an underlying interim net profit of $131 million, a 44 per cent decline from the December 2012 half.
Statutory net profit rose 2.7 per cent to $263.893 million.
Revenue declined 41.7 per cent to $1.577 billion, down from $2.704 billion in the previous corresponding period.
Earnings per share rose to 81¢, up from 79¢ in the first half of the last financial year. In December the company announced a 12 million share buyback, representing 3.9 per cent of the value of the company, that will commence in March.
The company announced an interim dividend of 20¢ per share, consistent with the previous corresponding half. The interim dividend has a record date of March 28 and is payable April 11.
In November the company reiterated it expected earnings to fall between 30 per cent to 40 per cent as its WesTrac business cut a further 630 jobs on top of the 350 cut in June.
WesTrac, is the sole dealer for heavy earth moving equipment brand Caterpillar in Western Australia, New South Wales, the Australian Capital Territory and north-eastern China.
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10:23am: Moodys has downgraded the credit rating of struggling mining services business Boart Longyear.
The shares, which were up 7 per cent this morning, have sold off but are still 1.8 per cent up for the day. Upvotes:1 Downvotes:0 Copy Link
10:11am: Qantas will axe 5000 jobs, ditch unprofitable routes and retire ageing gas-guzzling planes in the biggest shake-up of its operations since it was floated almost two decades ago.
It is the biggest cull of Qantas staff since chief executive Alan Joyce took the reins in 2008, and will reduce the airlines workforce to about 27,000 over the next three years.
Before the latest retrenchments, Mr Joyce had announced almost 4200 job cuts during his tenure.
The airline also reported a $252 million underlying loss in the first half amid a bitter fight with Virgin Australia in the domestic market, and intense competition on international routes.
It is Qantas biggest first-half loss since the Keating government began cutting it free from government ownership in 1995.
Qantas shares fell sharply, down about 7.9 per cent at $1.17.
Qantas will ditch flying between Perth and Singapore later this year and retire six Boeing 747 jumbos. It has also deferred the delivery of the last eight A380 super jumbos it has on order, as well as the last three of 14 new 787 Dreamliners due for Jetstar.
It will also shelve growth plans for Singaporean budget offshoot Jetstar Asia amid intense competition with other budget airlines in the region.
Read more here and tune in to the live Qantas results blog here.
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10:01am: Online job outsourcer Freelancer.com has notched up a 53 per cent rise in underlying earnings during 2013, beating initial forecasts but performing below analyst estimates as the company continues an aggressive growth path.
In inaugural results posted after the company’s ASX debut in November, Freelancer reported underlying EBITDA of $1.2 million, below analysts estimates of $1.6 million. Its reported earnings were $700,000 after a $394,000 charge for its initial public offering.
The company’s underlying net profits reached $1.1 million – a reported $800,000 after IPO costs – after its revenues rose 77 per cent to $18.7 million.
The company, which allows users to post graphic design and programming jobs to be completed by freelancers, said it attracted 2.9 million new users to the site during the year, to reach 10.3 million new users in total.
About three out of four new users are freelancers, largely from developing countries, and the rest are those posting jobs.
The company debuted on the ASX to strong interest from shareholders. Shares grew from an IPO price of 50¢ to $2.50 on opening, briefly valuing the company at more than $1 billion.
The share price has fallen 5.4 per cent to $1.40 on the announcement, but is trading on a P/E of 700 times expected earnings for this financial year, on Bloomberg numbers.
Chief executive Matt Barrie defended the high multiples at which the stock is trading as a useless metric because the company is investing most of its profits back into operations.
“I could have made it zero [profits],” Barrie told the AFR. “We were just trying to run it as close to break even as possible. Upvotes:0 Downvotes:0 Copy Link
9:51am: Mining service company Maca is in a trading halt pending an announcement in relation to a proposed financial transaction.
The stock will return to trading either at the time of the announcement or by Monday at the latest. Upvotes:1 Downvotes:1 Copy Link
9:47am: Australians still believe now is a good time to buy a residential property but concerns remain about a housing market correction, according to the latest RP Data/Nine Rewards survey of housing market sentiment.
Three quarters of those surveyed in January said now was a good time to buy a property, slightly down on the 80 per cent who said it was a good time to buy when surveyed a year ago.
By comparison, vendor confidence surged strongly in line with rising house prices, with 52 per cent of respondents saying now was a good time to sell, compared with just a third of respondents a year ago.
This suggests listings could rise over the next six months at the same time as appetite for property might be falling slightly.
House-buying sentiment is strongest in the more affordable markets of Adelaide, Brisbane and Tasmania and weakest in the most expensive markets of the Northern Territory, the ACT, Sydney and Melbourne.
Confidence about buying property is generally high in the regional areas, where property is more affordable and prices have either risen modestly or not at all.
One in two of those surveyed expect property values to rise over the next six months, with most of these tipping gains of 5 per cent or less.
A tiny proportion (5 per cent) expect house prices to fall over the next six months with the balance of 45 per cent expecting no change in values. Upvotes:0 Downvotes:2 Copy Link
9:39am: Mining services company Bradken has withdrawn its offer to buy peer Austin Engineering, the company said in a statement to the ASX.
The offer – of 0.75 Bradken shares for one Austin share – was lobbed on 18 December, but “is no longer accretive for shareholders,” said the company, although Bradken “currently intends to continue to maintain a strategic holding” in Austin.
Shares in Austin have plunged almost 10 per cent on the news, while Bradken stock is trading 1.6 per cent higher. Upvotes:0 Downvotes:0 Copy Link
9:34am: Oil Search has suspended its shares from trading as it seeks to finalise a sale of shares to institutions to fund what is expected to be an investment into the large Elk and Antelope gas fields held by InterOil.
The company, Papua New Guinea’s flagship oil and gas producer, is understood to have been caught up in a bid by the PNG government to regain a foothold on the share register, potentially through a strategic placement of shares.
But the announcement Thursday refers to “an institutional placement” to fund a “proposed material acquisition.”
Oil Search signalled an announcement on the raising could come by the start of trading on Friday.
Analysts have suggested Oil Search may raise several hundred million dollars through the equity raising.
Oil Search halted its shares from trading on Tuesday pending an announcement on the deal, but has now had to suspend the stock as the details are wrapped up. Upvotes:0 Downvotes:0 Copy Link
9:20am: Here are the ASX 200 stocks trading ex-dividend today:AurizonFairfax MediaFortescueIAGSantosSpark InfrastructureToll Holdings Upvotes:0 Downvotes:0 Copy Link
9:18am: Shares have opened weaker, with the ASX 200 down 21 points in early trading to 5416.2, and the All Ords 19 points lower to 5427.8.
All sectors are lower aside from telcos, which are marginally higher as a group.
Utilities are the worst performers, with the sector down 1.1 per cent.
BHP is the biggest drag on the market, down 0.5 per cent, while Fortescue is 1.9 per cent lower. Rio is down 0.4 per cent.
IAG is 2.4 per cent lower as its shares trade ex-dividend. Upvotes:1 Downvotes:0 Copy Link
8:57am: Nine Entertainment Co has posted its maiden interim results as a listed entity with earnings slightly above its underlying forecasts in its flotation prospectus.
The television, events and digital group reported net profits of $31.7 million after tax in the six months to December 31, versus losses of $93.8 million in the same period a year earlier.
Revenues rose from $657 million to $803 million as Nine Network, the television business, reported its fifth consecutive year of ratings improvement.
On a pro-forma basis, revenue increased 9 per cent to $846 million and EBITDA by 17 per cent to $189 million.
Chief executive David Gyngell said he was “pleased’ with the performance and the company was “making good progress” integrating its newly acquired Adelaide and Perth television operations and its now fully-controlled Mi9 operations.
The group said it was confident of delivering pro forma EBITDA of $305 million as forecast in its prospectus.
Nine said the events business had posted a record half, but for the Nine Digital business – which includes Mi9, of which Nine took full control from its former joint venture partner Microsoft – EBITDA fell 35 per cent to $13.7 million on revenues 1 per cent higher at $79.4 million.
There is no dividend.
Read more. Upvotes:1 Downvotes:0 Copy Link
8:50am: Transfield Services plans to sell its Indian operations and a minority stake in power producer Ratch-Australia as it swung to a $4.8 million net profit in the first half and outlined changes to its business model.
Transfield, which reported a $247 million interim loss a year ago, will abandon its regional operating structure and run its business through three sectors from 2015: defence and social services; infrastructure and property; and resources and industrial.
Group revenues fell 2.6 per cent to $1.8 billion.
Transfield did not pay an interim dividend.
Underlying EBIT in the company’s Australia and New Zealand business, which contributes 61 percent or group revenues, dropped 14 per cent to $31.2 million as contacts ended.
Underlying EBIT also fell in the group’s resources and energy division, down 13 per cent to $15.6 million as Transfield received less work from the mining industry, and dropped 90 per cent in the group’s Americas division to $700,000 as the company’s US oil and gas business was scaled back.
Transfield took $7.9 million of restructuring costs in the first half, $1.6 million higher than forecast, and said more restructuring costs would be incurred in the second half.
The company reiterated its previous full year profits guidance for net profits after tax pre amortisation of between $65 million and $70 million. Upvotes:0 Downvotes:1 Copy Link
8:47am: There’s speculation that medical services company Primary Health Care is considering a move into the $500 million-plus fertility services market and potentially offer a lower cost IVF product than existing operators.
The Australian reports that the strategy had been flagged by Primary managing director Edmund Bateman at several investor briefings following the company’s recent interim results.
While the company is not commenting on the idea, it is understood that Primary believes it has the existing scale and infrastructure to launch into fertility treatments, including IVF, in the near future, the newspaper said.
Such a move would see Primary challenge more established operators in the space, including the market leader and recently listed Virtus Health, which saw its share price slump more than 8 per cent to a five-month low yesterday on concerns over future growth. Upvotes:0 Downvotes:0 Copy Link
8:44am: Newly-listed comparison website iSelect has reported that “strong growth” in its health and car insurance divisions underpinned interim revenue growth of 18 per cent to $55.8 million.
The company increased EBITDA to $6.8 million, from $3.9 million, in the six months ended December 31.
Net profit rose a very large 1,698 per cent to $3.7 million, up from just $205,000 in the previous corresponding period.
Chairman Damien Waller said the company was pleased to meet EBITDA and revenue guidance for the half made in October last year, at which point the company downgraded its revenue forecasts made in its prospectus.
The downgrade followed a rough start to its time as a listed company, which included the resignation of chief executive Matt McCann just four months after its June 2013 debut.
The company is still searching for a new chief executive.
“The solid half on half growth reported today shows that the fundamentals of our business remain very strong,” Mr Waller said.
There was no dividend declared for the period.
Read more. Upvotes:0 Downvotes:1 Copy Link
8:43am: Wotif.com chief executive Scott Blume says it is “too early to say” whether booking numbers in the online travel groups core hotel business will continue to fall in the second half.
This is a year of transition for us, he said after Wotif reported an 18 per cent fall in first-half profit to $22.6 million due to increased spending on marketing amid intense competition in the online travel market. The figure was at the high end of guidance provided in December.
Wotifs first-half revenues rose to a record $75.8 million in the half, up 3.5 per cent from the same period last year, but that was driven primarily by an increase in commissions. Hotel booking transaction numbers in Australia and New Zealand fell 7 per cent to 2.7 million. But revenue in the smaller flights and packaging business grew by 20 per cent amid a 27 per cent increase in the number of flight bookings to 110,000.
Wotifs interim dividend fell 13 per cent to 10¢ a share.
The falling earnings and relatively tough outlook for the business has led the Wotif share price to fall by 51 per cent over the past 12 months, compared with an 8.7 per cent rise in the benchmark ASX 200 during that period.
That has led to speculation that overseas rivals could make a bid for the company. Upvotes:0 Downvotes:0 Copy Link
8:35am: Early news on Qantas and as expected it’s pretty grim.
The airline is cutting 5000 jobs.
Its also posted an underlying first-half loss of $252 million, its biggest since the float in 1995.
First-half revenue was $7.9 billion.
No surprise, the airline is not paying a dividend.
You can read the live blog on the Qantas results here. Upvotes:3 Downvotes:1 Copy Link
8:27am: Expect another weak start from the miners this morning, as the iron ore price slipped another 1.3 per cent overnight to $US117.8 a tonne.
The price of the key bulk commodity has now slumped 16 per cent since early December, when the metal reached its most recent peak of close to $US140/tonne.
London-listed shares in BHP and Rio fell overnight.
Iron ore prices have fallen 15 per cent since early December. Upvotes:1 Downvotes:0 Copy Link
8:22am: Perpetual will pay an interim dividend of 80¢ per share – a 60 per cent improvement from the first half of fiscal 2013.
The group’s funds under management also enjoyed healthy gains after rising 20 per cent since June 30 to $30.4 billion. Revenue rose 16 per cent to $203.51 million, the company said in a statement to the ASX.
Chief executive Geoff Lloyd said the group was on track to deliver $50 million of annual pretax savings through its Transformation 2015 program.
“Importantly, our growth agenda has been accelerated by the exciting acquisition of The Trust Company in December, which has added significant scale and capability to our business,” Mr Lloyd said in the statement.
“There is a strong sense of achievement and momentum across the organisation as we see the benefits of disciplined execution.” Upvotes:0 Downvotes:0 Copy Link
8:19am: Air New Zealand has reported a 29 per cent rise in interim profit before tax to a record $NZ180 million in a result that will outshine both major Australian airlines.
Air NZ chairman Tony Carter said that based on stable fuel prices and a traditional seasonal earnings pattern of a stronger first half, the airline expected full-year earnings to rise to more than $NZ300 million.
That compares with Qantas, which on Thursday is expected to report a first-half pretax loss of up to $300 million.
Virgin is due to report a pretax loss of $49 million, excluding additional losses from Tigerair Australia on Friday.
The Kiwi carrier is the largest shareholder in Virgin Australia.
Air NZ chief executive Christopher Luxon said the company’s improved results were enabling his airline to improve the customer experience, explore new markets and invest in its people and culture.
Mr Luxon said conditions in the Australian domestic market remained tough.
Air NZ declared a $NZ4.5c a share interim dividend, up 50 per cent from last year.
Read more. Upvotes:0 Downvotes:0 Copy Link
8:13am: Heres a list of companies due to report earnings today:Air New ZealandHendersoniSelectMacquarie AtlasNine EntertainmentNRW HoldingsPanoramic ResourcesPerpetualQantasSedgmanSeven GroupTransfield ServicesUGL Upvotes:0 Downvotes:0 Copy Link
8:09am: The key economic data release today is the much anticipated fourth quarter capital expenditure survey, released at 11:30.
The market will focus on both the extent of weaker mining investment but more importantly on potential recovery in non-mining investment, says ANZ.
The key figure to look for is the first reading of non-mining investment for 2014-15. ANZ’s economists reckon a number greater than $53 billion is strong, while below $47 billion would be considered weak.
In terms of Q4 actual capex, they expect the figure to have declined by 1.7 per cent quarter-on-quarter (consensus: -1.3% q/q). Upvotes:1 Downvotes:0 Copy Link
8:08am: Were separately live blogging the Qantas results (due any minute) and related conference with CEO Alan Joyce, as the country braces for thousands of job losses.
You can read the live blog here. Upvotes:0 Downvotes:0 Copy Link
8:02am: Local stocks are set to open weaker as iron ore falls again overnight and ahead of earnings from Qantas and Seven Group.
Here’s what you need2know:SPI futures down 15 points at 5422 at 8:20am AESTAUD at 89.7 US cents at 8:20am AESTOn Wall St, S&P500 flat, Dow Jones +0.12%, Nasdaq +0.1%In Europe, Euro Stoxx 50 -0.29%, FTSE100 -0.46%, CAC -0.4%, DAX -0.39%Spot gold down $US12.25 to $US1328.25 an ounceBrent oil up 19 US cents to $US109.70 per barrelIron ore down again, dropping 1.3 per cent to $US117.80 per tonne.
What’s on today in economics releases:Australia: capital expenditure at 11:30New Zealand: trade balance at 8:45
Upvotes:0 Downvotes:0 Copy Link
8:02am: Good morning and welcome to the Markets Live blog for <today>
Your editors today are Jens Meyer and Patrick Commins.
This blog is not intended as investment advice.
BusinessDay with wires. Upvotes:0 Downvotes:0 Copy Link