Australian shares snap a two-day advance as worries about Spain douse investor hopes that Europe may be on the rebound. Doubts about the timing and size of China’s stimulus also held back stocks.
4.55pm: Here’s the evening wrap of today’s session. That’s all for today – have a good evening.
4.30pm: That’s just about it for today’s Markets Live blog. We’ll point you to the evening markets wrap shortly.
Tonight should see a slew of confidence guages – consumer, economic, industrial – from Europe, and there’s also a big Italian bond auction. The US doesn’t appear to have any major economic figures looming.
Thanks for joining us today – and look out for our return tomorrow at 9.30am, AEST.
4.25pm: Here’s a comment on how the market fared:
Tim Waterer senior FX Dealer CMC Markets said the market pared earlier losses but struggled to push higher amid weak signals for global growth coming from China and Spain.
“We have recovered off the day’s lows,” he said. “We got off on a pretty negative footing thanks to the fears circulating about the Spanish banking industry.”
Also, the market scaled back their expectation for what stimulus may come from China, he said. “Not surprisingly it was the materials and energy sector that felt most of the brunt of the Chinese stimulus story,” he said.
4.21pm: Other notables:
Newcrest shed 2.3% to be second-biggest drag on stocks after BHP.
CSL was biggest plus for the market, up 0.7%
4.18pm: Major stocks:
BHP down 0.6%
Rio off 1.4%
ANZ up 0.1%
CBA down 0.3%
NAB up 0.04%
Westpac down 0.6%
Fortescue off 1.2%
Telstra up 0.3%
Macquarie Group up 0.7%
4.15pm: Among the major sectors: materials lost 1 per cent, energy gave up 0.8 per cent and financials fell 0.3 per cent.
4.13pm: The All Ords ended down 19.4 points, or 0.5 per cent, to 4148.8 points.
4.11pm: The ASX200 closes down 20.2 points, or 0.5 per cent, to 4094.2 points.
4.07pm: Facebook co-founder Mark Zuckerberg has dropped off Bloomberg’s list of the richest 40 billionaires in the world only days after his social media company’s disastrous launch on the US stockmarket.
Mr Zuckerberg, whose total worth was estimated at $US19.4 billion ($19.7 billion) on May 19 by Bloomberg did not appear on the list today after shares in the company continued their post-float nose-dive.
Shares in the social media giant tumbled nearly 10 per cent on Tuesday in the US, losing $US3.07 to close at $US28.84. That close was nearly 36 per cent below their intraday high of $US45 on the first day of trade, which valued the company at $US104 billion, making it the largest initial public offering of a tech stock in history.
(Read more here.)
3.59pm: A quick look at other markets as local trading winds down:
Dow futures are off about 0.4 per cent and London’s about 0.5 per cent, pointing to lower openings for both.
Spot gold was recently down for the day at $US1550 an ounce while New York oil futures were hovering at just over $US90 a barrel.
3.53pm: One stock that’s done well today is Bendigo and Adelaide Bank. Its shares are up about 2.3 per cent in late trade to $7.375.
May have something to do with Goldman Sachs raising its recommendation the bank to ‘neutral.’
3.45pm:Here’s a sign of how Aussie banks are responding to rising funding costs, thanks to Europe:
Australia’s biggest banks are retreating from bond sales as Europe’s fiscal crisis infects credit markets, driving up relative yields on the nation’s financial notes to the highest in almost three years.
Commonwealth Bank and its three largest peers have raised $US9.5 billion since March 31 selling bonds globally, down 83 per cent from the previous quarter, according to data compiled by Bloomberg.
Yield premiums on Australian financial debt surged as high as 322 basis points more than government notes on May 24, the most since June 2009, and matched a record relative to global bank spreads earlier this month, Bank of America Merrill Lynch data show.
The lenders can afford to stay on the sidelines after raising $US25 billion from covered bonds in the first quarter, 12 per cent of global offerings of the mortgage-backed notes, as Europe’s deepening turmoil spurred them to lock in funding. Corporate bond sales worldwide have fallen 61 per cent since March 31 amid concerns about Greece’s possible exit from the euro and the health of Spanish banks.
“Right now we are feeling pretty comfortable and have the flexibility to be able to stay out of the markets,” said Luke Davidson, head of group funding at ANZ, said . “It is a good position to be in given all the volatility out there.”
3.38pm: We highlight Spain, but it’s also China that’s denting confidence.
BusinessDay‘s Dragon Era column yesterday noted that it was risky to bet everything on a China stimulus.
Well, there’s been some confirmation of that overnight – with China’s Xinhua news agency hosing down hopes:
China has no plan to introduce stimulus measures to support growth on the scale unleashed during the depths of the global credit crisis in 2008, Xinhua said – as Bloomberg reports.
“The Chinese government’s intention is very clear: It will not roll out another massive stimulus plan to seek high economic growth,” Xinhua said yesterday. “Current efforts for stabilising growth will not repeat the old way of three years ago.” In 2008, policy makers unveiled a fiscal stimulus of 4 trillion yuan ($595 billion in today’s dollars).
China stocks fell as the report damped speculation of government policy action spurred by Premier Wen Jiabao’s call last week for a greater focus on growth. Stimulus restraint may reflect concern that the record lending boom that helped the nation weather a contraction in trade in 2008-2009 raised risks of a bad-loan crisis.
“They have to strike a delicate balance between doing something to stabilise growth and not overshooting,” said Shen Jianguang, Hong Kong-based chief Asia economist for Mizuho Securities Asia.
3.25pm: Meanwhile, just moving this item on this blog’s biggest shareholder:
Hancock Prospecting Pty, controlled by mining magnate Gina Rinehart, said complying with Australian regulatory requirements to lodge financial statements would reveal operating costs at its only working mine and reduce its negotiating power.
The Australian Securities Investments Commission ordered Hancock to submit its 2010 financial statements on August 9, 2011, more than a month after they were due under the Corporations Act, according to correspondence obtained by Bloomberg News under the Freedom of Information Act.
Hancock obtained a report from Lonergan Edwards Associates Ltd. that said public disclosure of the statements, combined with releases by Rio Tinto Group, its partner in the Hope Downs mine, will enable the calculation of the average selling price, cash cost and profit margin at the operation.
Perth-based Hancock appealed the order from ASIC and a preliminary hearing before the Administrative Appeals Tribunal is scheduled for June 13.
(Read the full item here)
3.15pm: You may have seen our earlier story on VB: the second best cold beer.
Bit of a distraction from the main game, but you may find the related poll on best beers of some mild amusement.
3.10pm: The local losses are fairly broadbased: miners and energy stocks are off 0.8 per cent and financials are down 0.4 per cent.
Among the top 50:
Sydney Airport 1.1%
3.04pm: Quite a down day across the region, with Australia faring around the middle in terms of losses.
Hong Kong is off 1.9 per cent, while Japan’s main indexes are down about 0.7 per cent. Mainland Chinese markets are barely lower.
2.54pm: NSW Premier Barry O’Farrell is in the news not just for the power privatisation – but also a rather lukewarm endorsement of former Victorian premier Jeff Kennett:
Kennett is ‘‘more than capable’’, following a push by billionaire James Packer to have the former Victorian premier on the board of casino operator Echo Entertainment.
Mr Packer, who holds a 10 per cent stake in the owner of The Star casino, wants to oust chairman John Story and Mr Kennett to take his place onto the board.
Asked for his opinion of Mr Packer’s boardroom putsch, Mr O’Farrell said: ‘‘I’m not a shareholder, I don’t have to make anything of them.
‘‘Jeff Kennett is certainly someone who is more than capable of being a chairman of a public company.
2.41pm: BusinessDay’s Michael West has just filed an interesting read on how one farming family is finding out what perverse investment priorities can do to a rural idyll:
Rising power prices are an enormous issue, in NSW and elsewhere in Australia. They are critical, moreover, to business and consumer demand, and the fate of the entire economy.
And while politicians and media focus on the carbon tax as the culprit in the debate over rising power prices, transmission costs – a more significant factor – are overlooked.
And here’s some of the comments from the family involved:
“We came (to rural NSW) for the pristine environment,” says Belinda Robertson. “We farmed without chemicals, fenced 2.5 kilometres of river to protect its banks from grazing cattle.
“We planted hundreds of trees, contributed 1kw solar power to our power requirements, insulated every wall in the house. We have no air conditioner, no heater, no microwave, and if the power lines go up, no compensation”.
(Read the full story here or bookmark for later.)
2.31pm: The dollar may be steadying, but other currencies are on the move:
The euro hit a fresh two-year low against the greenback, hurt by worries about Spain’s soaring borrowing costs and expectations that more spending may be needed to support its ailing banks, Reuters reports.
The 10-year Spanish government bond yield hit a new six-month high overnight and the sell-off in Spanish bonds has driven up their risk premium over haven German Bunds to euro-era highs this week.
“It’s as if everything starts and ends with Spain. Everyone is talking about Spain, putting Greece’s problems on the back burner,” said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
2.22pm: The Aussie dollar remains below the 98 US-cent mark – but only just.
Interestingly, the betting on interest rate futures eased if anything after the retail sales figures. There’s about a 22 per cent chance of another 50 basis-point cut when the RBA meets on June 5 – slightly less than just prior to those retail figures we noted below.
2.10pm: Seems like the ASX200 will trim its losses. Here’s a view from Reuters on why things may not be so gloomy:
“Concerns in Spain and the negative news from the ECB are putting commodities under pressure, but they shouldn’t. I think the markets are a bit ahead in currencies,” said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.
“I actually feel there is more good news out there at the moment than negative news, and as a result of that, the dollar index, which is reaching a very important level, should come under pressure. It’s time to consolidate, and I look for that.”
Barratt said markets have become better-educated regarding the extent of the euro zone’s debt woes while Greek voters were showing signs they want to stay in the currency union, helping to remove one uncertainty. The US economy remains on recovery track to underpin demand for some commodities such as oil, he said.
1.58pm: Bit of a power play:
NSW’s electricity generators will be sold off after the state government got the support of the crossbenchers.
NSW Premier Barry O’Farrell says the move will go ahead after getting support from the Shooters and Fishers Party.
Mr O’Farrell says the sale will unlock $3 billion for critical infrastructure. However, he has agreed to allow shooting in national parks, in a deal to gain the Shooters support.
You got it: power plants sold off in return for shooting up national parks. Does that seem Faustian to anybody?
1.52pm: The Productivity Commission says “undeniable” economic benefits of the mining boom are outweighing the harm being inflicted on struggling industries, such as manufacturing.
Gary Banks, the chairman of the Commission, has taken aim at claims the economy is being hollowed out by the boom, leaving many Australians worse off.
After recent job shedding in manufacturing, Mr Banks says the main pressure on the sector was due to higher domestic demand for services, rather than expansion of mining.
“What has happened is that the injection of wealth from the boom has fuelled increased domestic spending on goods and services,” Mr Banks said at a Minerals Week function in Canberra.
1.36pm: President Susilo Bambang Yudhoyono has called on Australian banking giant ANZ to help boost investment in the Indonesian cattle industry as the archipelago continues its drive towards self-sufficiency.
The appeal for ANZ to help drive investment in the Indonesian cattle industry, which comes in the wake of Australia’s decision last year to suspend the live export trade, was made during a meeting with the bank’s chief Mike Smith in Jakarta.
Indonesia’s Economics Minister Hatta Rajasa, who also took part in the meeting at the presidential palace on Tuesday, says Dr Yudhoyono made a special point of asking ANZ for assistance in boosting development in the cattle industry.
1.28pm: The once-thought-impossible has happened. Australia’s most popular beer for decades, VB, has lost its crown for the first time with interloper XXXX Gold from Queensland now officially the nation’s most drunk beer, Eli Greenblat reports.
The latest figures from Nielsen show that XXXX’s mid-strength beer now commands 12.4 per cent of all beer consumed in Australia, just beating out the iconic VB, which came in second with 12.3 per cent.
Sales of VB, owned by global brewer SABMiller, have been dwindling for the last few years, dragged lower by increased competition from a slew of international beers such as Corona and Heineken, and a switch by drinkers to craft beers, wine and other alcoholic drinks.
1.18pm: Oil prices are lower as concerns that debt-plagued Spain could be forced to seek a bailout roiled the markets.
Prices were under pressure after the euro plummeted, making US dollar-priced oil more expensive and dampening demand.
New York’s main contract, West Texas Intermediate crude for delivery in July is down 41 cents to $US90.35 per barrel while Brent North Sea crude for July shed 43 cents to $US106.25.
“Spain remains the key worry for the eurozone debt crisis, eclipsing optimism in Greece that the pro-bailout conservatives are leading the polls ahead of next month’s election,” say analysts from DBS Bank in a commentary.
“As far as the eurozone crisis is concerned, the market does not see the light at the end of the tunnel.”
1.11pm: CMC markets foreign exchange dealer Tim Waterer says the dollar can’t take a trick at the moment, with the retail sales print bringing down the currency.
‘‘I guess the negative result was exacerbated by the fact that we had pretty poor global sentiment in the past 24 hours regarding Spain.”
Mr Waterer says the result would add to the case for more interest rate cuts by the RBA to help the non-mining sectors of the economy.
‘‘The negative retail sales result brought back into focus what is happening with the domestic economy. It brings back into question what the RBA is going to do with interest rates cuts over the next couple of months.
‘‘It gives the RBA more room to move on the down side with the interest rate and would reduce the appeal of the Australian dollar.’’
1.03pm: Gina Rinehart’s Hancock Prospecting says complying with Australian regulatory requirements to lodge financial statements will reveal operating costs at its only working mine and reduce its negotiating power.
ASIC ordered Hancock to submit its 2010 financial statements on August 9, 2011, more than a month after they were due under the Corporations Act, according to correspondence obtained by Bloomberg under the Freedom of Information Act.
Hancock obtained a report from Lonergan Edwards Associates that said public disclosure of the statements, combined with releases by Rio Tinto, its partner in the Hope Downs mine, will enable the calculation of the average selling price, cash cost and profit margin at the operation.
Perth-based Hancock has appealed the order from ASIC and a preliminary hearing before the Administrative Appeals Tribunal is scheduled for June 13.
12.59pm: Here are the top 10 movers on the ASX100. Not too surprising that they’re all fallers:
- Newcrest Mining -3.58%
- Panaust Limited -2.84%
- Atlas Iron -2.70%
- Perseus Mining -2.69%
- Boral -2.66%
- Santos -2.59%
- Alumina -2.30%
- Qantas -2.30%
- QBE Insurance -2.29%
- Oz Minerals -2.18%
12.53pm: Weak retail sales in April builds the case for more rate cuts from the RBA, says 4Cast Ltd economist Celeste Tay.
”We expect further consumer caution from here and the risk is an intensification in Europe’s sovereign and banking crisis, a larger slowdown in China and a softening in the US economic recovery could see further belt tightening in household consumption,” she says.
”We remain of the view that the RBA is likely to help alleviate strains on the non-mining part of the economy with a follow up rate cut in June.”
12.47pm: Suncorp will push ahead with the marketing of a $750 million covered bond issue, marking the first sale of the lower-risk securities by a regional bank, Eric Johnston reports.
Initial pricing on the 4.5 year fixed rate covered bond is at 140 basis points over mid-swap rates. This marks a discount to the 160 basis point pricing recorded by Westpac for a similar issue the start of the year.
Commonwealth Bank sold $3.5 billion of five-year covered notes in January, priced at more than 175 basis points more than swap rates.
12.41pm: Commonwealth Bank chief economist Michael Blythe says today’s retail data “shows the patchwork economy, with strong construction data benefiting from the mining sector and weak retail numbers hurt by the non-mining sector”.
“We believe the Reserve Bank of Australia will keep its easing bias with the next move probably in August.”
12.32pm: AGL Energy’s $448 million takeover of the Australia’s third largest coal fired power station has received final approval.
The company’s purchase of the 67.5 per cent interest in the Loy Yang power plant and mine that it did not already own last week got the green light from the ACCC.
The deal also required the removal of Federal Court undertakings that limit AGL’s ownership of Loy Yang to 35 per cent. AGL now expects its takeover to be completed by June 30.
12.25pm: Among the sectors, miners are down 1.4 per cent, gold stocks are 3.3 per cent lower and financials are 0.6 per cent lower.
12.21pm: At midday (AEST), the ASX200 is down 38 points, or 0.9 per cent, to 4076.4. The dollar is lower after the release of the retail data – it’s at 97.90 US cents.
12.15pm: Origin Energy has flagged the potential for a writedown of its $134 million stake in Transform Solar, its photovoltaics joint venture in the US which stopped production today.
The joint venture owns the ultra-thin ‘Sliver’ solar cell technology, invented and developed at the Australian National University’s Centre for Sustainable Energy Systems.
Production at Transform’s Idaho plant will be discontinued indefinitely, Origin says, with an unspecified number of US workers to be stood down.
12.09pm: Salmat Limited has revealed it has received an “unsolicited and conditional approach regarding the possible acquisition of its Business Process Outsourcing (BPO) division”, its direct marketing arm.
Shares are trading 12 cents higher at $2.25, a 14 per cent increase. Salmat said the approaching party was ”credible” and it was discussing the approach with its advisors Macquarie Capital and Clayton Utz.
11.59am: Resources Minister Martin Ferguson has told miners the government is sympathetic to their concerns about the cost of doing business in Australia.
Addressing the Minerals Council of Australia conference in Canberra, Mr Ferguson says global trade across several commodities would continue to grow in the next five years.
The minister said Australia was a high-wage economy, and improving efficiency of labour, plants and equipment will be crucial to keep up with the demand.
‘‘But we cannot afford to believe that things will just naturally work out for the Australian economy,’’ Mr Ferguson says.
11.54am: Here’s a state-by-state breakdown of the retail numbers:
Retail sales plunged 1.6 per cent in Victoria, on seasonally adjusted terms, while they grew 0.7 per cent in New South Wales.
In Western Australia sales sank 0.2 per cent, while they inched up 0.1 per cent in Queensland, the ABS data shows. In Tasmania retail sales fell 0.6 per cent, matching the ACT’s 0.6 per cent fall in the month.
11.48am: NAB economist Ali Knight says the retail data is a fairly weak outcome, following “surprising strength in March”.
The department stores are really struggling,’’ she says. ‘‘It’s possible that there is heavy discounting happening without an increase in demand.’’
Department store sales fell 1 per cent in the month, seasonally adjusted, while food sales rose 0.1 per cent.
‘‘Margins are being squeezed. We’re seeing it across the board.’’
11.44am: The latest retail stats also include revisions, with March’s retail sales growth revised higher to a 1.1 per cent advance, while construction work down in the previous quarter – the last three months of 2011 – was revised to a 3.4 per cent contraction.
11.39am: Looking at the retailers – most are down for the day:
- Woolies is down 0.8%
- Wesfarmers is down 0.9%
- Super Retail Group is down 1.8%
- David Jones is down 2.2%
11.33am: Those bad retail sales figures – the market had been expecting a rise not a fall of 0.2 per cent – have lopped about a third of a US cent from the dollar, sending it down to 97.8 US cents.
11.31am: Construction work done came in at a rise of 5.5 per cent for the March quarter – better than expected, unlike retail sales.
11.30am: And retail sales for April have just landed: They fell 0.2 per cent.
11.28am: Also going into these key economic figures, the Aussie dollar’s buying 98.15 US cents a few minutes ago, and it was also worth 78 yen, 78.7 euro cents and 62.9 pence.
Interest rate futures, meanwhile, are tipping about a one-in-four chance of another 50 basis-point cut by the RBA when it next meets on June 5.
11.22am: Among retail stocks, David Jones is off about 2.2 per cent, and Reject Shop 1.2 per cent, ahead of these retail sales figures.
We’ll also get some figures for ‘construction work done’ for the March quarter – so a bit of a lagging indicator. Analysts are expecting a 3 per cent rise, reversing much of the December quarter’s 4.6 per cent retreat.
11.18am: Possibly good news for those seeking an alternative to live cattle exports:
Cattle producer Australian Agricultural Company has bought the site for its proposed $83 million abattoir in Darwin.
AACo paid $13.3 million for a 600-hectare site at Livingstone Farm, after being satisfied development conditions had been met.
The plant will be state-of-the-art and able to process 1,000 head of cattle a day.
AACo said the abattoir would create up to 260 jobs, providing substantial opportunities for indigenous and female workers.
11.14am: Just taking the poll down for the day. As you can see here, a bit over half of the respondents are tipping a down day for the market – a fair bet at this point.
11.08am: A few eyes will be on the retail sales figures for April that are due out at the bottom of this hour.
Market is expected sales growth to slow to 0.2 per cent for the month, down from the 0.9 per cent pace for March.
March’s growth pace was the highest in 11 months so some pull-back is expected.
10.58am: Melbourne-based Leyland Asset Management senior portfolio manager Rohan Schmidt says concerns about Europe continue to dominate.
“The Spanish government appears to be on a crash course with the European Central Bank on over how they’re going to bailout Bankia. That concern is overriding any rise we saw in America overnight.”
10.55am: Bell Direct equities analyst Julia Lee says after-hours action in US markets knocked the local market lower.
BlackBerry-maker Research in Motion posted a surprise first quarter loss, sending its stock down 7 per cent to $US10.43 in after-hours trade.
Ms Lee said that changed US futures, pushing them down, and leading Australian shares lower.
Sydney-based HC Securities analyst Luke Cummings said investors are disappointed the Chinese government has not announced any stimulus measures which had been speculated.
“I think it’s a case of ‘buy the rumour sell the fact,’” says Mr Cummings. “Our market got all worked up yesterday about a potential Chinese stimulus package and the reality didn’t quite match the expectation.”
“As a result, we’ve sold off a little this morning,” he says.
10.48am: In Japan, electronics giants Sony and Panasonic are the leading contenders to take an equity stake in Japan’s scandal-hit Olympus, a report says, sending Olympus’ shares surging.
Olympus is struggling to recover from a $1.7 billion accounting fraud which forced it to correct years of misleading accounts and left it with a paper-thin equity ratio.
Olympus shares surged as much as 9 per cent on the Asahi Shimbun report to a month high of 1276 yen, though the stock has still lost half its value since the scandal broke in October last year.
Panasonic shares fell 2.4 per cent and Sony lost 2 per cent, both lagging the wider Tokyo market which is down 0.7 per cent.
10.42am: More from Wesfarmers… the compamy says reducing carbon emissions and its environmental footprint, “forming effective partnerships” and ethical and responsible sourcing are among its priorities, and has reported positive momentum for its Coles, Kmart and Officeworks businesses.
Managing director Richard Goyder says Wesfarmers is preparing for the introduction of a price on target with a “proactive mitigation strategy,” with energy consumption falling 11 per cent despite a 20 per cent lift in sales, and plans to mitigate energy costs by the 2015 financial year.
In a strategy day briefing, Mr Goyder labelled its Coles supermarket chain – which has boosted food and liquor sales from $21 billion to an estimated $26.5 billion this year – as a “bold turnaround” story.
10.37am: Seek, meanwhile, is one stock to buck the downward trend. It’s up 8 cents, or 1.2 per cent, in early trade to $6.74.
The stock is up about 18 per cent in 2012 and may have got a bit of a kick-along today from a News Ltd report that James Packer had quietly raised his stake to 4.9 per cent – although he apparently has no intention of lifting it further.
Perhaps saving some spare cash for a bigger wager on Echo.
10.35am: Among the banks, ANZ and CBA shares are down 0.5 per cent, NAB is flat and Westpac shares are 0.8 per cent lower.
10.30am: Coles plans to increase the size of its supermarkets as it continues its battle with Woolworths.
Managing director Ian McLeod says the supermarket giant wants to increase its floor space by two per cent each year.
Coles expects to open 19 new stores, close 11 stores, and extend 10 stores in the 2011/12 financial year.Up to 400 stores are also set to be refurbished.”
Shares in Coles owner Wesfarmers are down 36 cents, or 1.2 per cent, to $28.65.
10.27am: Tokyo stocks are down 0.22 per cent in early trade despite strong overnight performances on both European and US bourses.
The Nikkei 225 index at the Tokyo Stock Exchange opened down 19.13 points to 8637.95.
10.23am: The ASX200 is now down 37.2 points, or 0.9 per cent, to 4077.2. Among the sectors, miners are down 1.3 per cent, industrials are 1 per cent lower and financials have fallen 0.6 per cent.
10.20am: After big gains in New York, BHP and Rio Tinto are sharply lower in early trade on the local market. Rio has dropped 86 cents, or 1.5 per cent, to $57.28 and BHP is down 26 cents, or 0.8 per cent, to $32.11.
10.17am: It’s some hours off, but worth noting the market’s next euro test.
Later today, Italy will sell as much as 6.25 billion euros of five- and 10-year bonds – with the result likely to weigh on sentiment.
The threat of Greece exiting the eurozone together with Spain’s problems have refuelled wariness of weaker eurozone borrowers among international investors, who are estimated to now hold only about a third of Italy’s total debt, Reuters reports.
Five-year yields are set to climb above 5 per cent, rising sharply from a month ago.
“We are convinced Wednesday’s auction will meet good demand,” said Matteo Regesta, a strategist at BNP Paribas in London. “What we fear is Spain’s worsening situation. It is hard to imagine that Italy could go unscathed if Madrid were to tap the eurozone rescue fund or be forced to raise more debt.”
10.12am: Echo Entertainment shares have barely budged in the wake of James Packer’s latest move to oust John Story as chairman of the company.
Echo shares were up 1 cent to $4.36 in early trading – bringing this year’s gain to about 21 per cent.
Crown, meanwhile, was off as much as 11 cents, or 1.3 per cent, to $8.47. The Packer-controlled company is up about 5.8 per cent in 2012 compared with the 1 per cent gain in the overall ASX200 share index.
10.09am: Minmetals’ CEO Andrew Michelmore says the company has had approaches for its Avebury mine. He told Bloomberg that he doesn’t see China cancelling contracts for base metals although he reckons China can’t keep up growth rates of 10-12 per cent a year.
The company, meanwhile, continues to look for merger opportunities made possible by the recent falls in asset prices.
10.04am: Early look at the market: the ASX200 is down 4.3 points, or 0.1 per cent, to 4110.1.
9.59am: More woes for BlackBerry maker RIM – it warns it could report a loss in the current quarter and says it has hired investment firms to study its strategic options.
The move comes with the BlackBerry, which pioneered the smartphone, rapidly losing market share to Apple’s iPhones and devices powered by Google’s Android operating system.
The company’s shares plunged more than 10 per cent in after-hours trade following the announcement, after ending normal trading hours up 2.1 per cent at $US11.23.
9.52am: Programmed Maintenance Services almost tripled its profit in the last 12 months due to its exposure to the resources sector, and expects modest earnings growth in the year ahead.
Programmed, which provides staffing and maintenance services, has posted a net profit of $31.2 million in the year to March 31, up from $10.4 million in the previous year.
Managing director Chris Sutherland says Programmed’s resources division was the main driver of profit growth, with earnings up 98 per cent from the previous corresponding period.
9.48am: In case you missed this earlier, Facebook is making more headlines – and shareholders won’t be pleased.
Its shares have fallen below $US29 to a new low as nervous investors flee the company’s shares, concerned about the social network’s long-term business prospects and an initial offering price that proved too rich.
Shares of the No. 1 social network fell 10 per cent to an all-time low of $US28.65, before recovering slightly to $US29.01.
Since its market debut on May 18, the eight-year-old company has shed approximately $US25 billion in value – roughly equivalent to the market capitalisation of Morgan Stanley, the lead underwriter of Facebook’s IPO.
9.41am: James Packer is lobbying for former Victorian premier Jeff Kennett to be chairman of The Star casino owner Echo Entertainment, as the billionaire seeks a piece of Sydney’s sole casino license.
Mr Packer sent a letter to Echo shareholders calling for an extraordinary general meeting to oust chairman John Story, and install Mr Kennett as his replacement.
In the letter, the Crown chairman is critical of Mr Story’s performance, and highlights Crown’s superior financial performance to Echo.
The move follows criticism from Mr Packer of Echo management and its handling of investigations into sexual harassment claims against The Star’s former general manager Sid Vaikunta.
9.40am: Some news from earlier this morning… Shareholders in Canadian grains giant Viterra, owner of the old Australian-listed ABB Grain, have voted overwhelmingly in favour of commodities trader Glencore’s $C6.1 billion takeover bid.
At a meeting in Calgary overnight, 99.8 per cent of shareholders voted in favour of the $C16.25-a-share cash bid.
In Australia, former ABB Grain shareholders invest in Viterra via depositary interests listed on the ASX, which closed unchanged at $15.84 on Tuesday. They were trading around $10 until the bid was unveiled in March.
9.35am: Wesfarmers says nine-month Bunnings stores sales are up 6.3 per cent, while Office Works sales for the quarter alone are up 2.5 per cent.
Wesfarmers full-year capital spending will be about $2.2-2.4 billion.
9.30am: Good morning everyone. Some mixed signals for the market this morning with decent gains on Wall St and in Europe – but futures are pointing to flat-to-small gains when trading kicks off in about 30 minutes.
The June share price index futures contract is up 4 points to 4107, and the dollar is a bit lower – it’s at 98.44 US cents.
For more on how global markets perfomed overnight, here’s our preview, need2know.
What you need to know
- SPI futures are 4 points higher at 4107
- The $A is lower at 98.44 US cents
- In the US, the SP500 rose 1.11% to 1332.42
- In Europe, the FTSE100 rose 0.65% to 5391.14
- Gold fell $12.80 to $US1556.10 an ounce
- WTI crude oil rose 8 cents to $US90.94 a barrel
- Reuters/Jefferies CRB index is down 0.78% to 279.74
- Australian business news digest: May 30
This blog is not intended as investment advice
Contributors: Peter Litras, Peter Hannam
BusinessDay with wires