Shares flat as caution reigns

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The local sharemarket has ended the day flat after see-sawing during the session.

We have now ended our live coverage of the Australian sharemarket for the week. As Monday is a public holiday in NSW, the ACT and South Australia, we will resume this blog on Tuesday morning shortly before the market opens at 10am. Have a good (long) weekend. (Tips: Cats by 11 points, Manly by more).

4.29pm: Before we close our live markets blog for the day, and this week, here's how some blue chips ended the day.

The big miners both ended lower, with BHP slipping 0.06 per cent to $35.02 and Rio down 1 per cent at $61.80.

Among the major banks, Westpac dropped 1 per cent to $20.34, NAB fell 0.6 per cent to $22.37, ANZ shed 0.3 per cent to $19.52, while CBA added 0.1 per cent to $45.55.

Woodside had a good day, rising 1.06 per cent to $32.48.

4.16pm: Another asset that is - so far - slightly up for the week, is the Aussie dollar. The gain is only about 0.4 per cent, with a few hours to run, but it's on course for its first advance in four weeks.

Look at this table, though, from Bloomberg of how far it's fallen against 10 major peers in the September quarter. For instance, the yen has jumped more than 15 per cent against the Aussie. Even the kiwi dollar has advanced.

4.12pm: The market has closed flat, after a day see-sawing between gains and losses. The benchmark S&P/ASX200 ended up 0.3 point at 4008.6, while the broader All Ordinaries index edged up 2.2 points, or 0.1 per cent, to 4070.1.

Gains were led by the energy sector, which rose 1.2 per cent, while financials slipped 0.1 per cent and materials ended flat.

CMC Markets chief market analyst Ric Spooner said investors showed little enthusiasm for increasing risk as volumes remained subdued. 

  • Investors are unlikely to adjust their risk outlook until there is concrete news on the European debt situation. The consensus view is that there will be further renegotiation of Greek debt which will need to be accompanied by plans to beef up international liquidity to limit the chances of contagion and an adverse impact on the operation of credit markets. 
  • In the meantime investors are being confronted by a steady stream of news indicating subdued economic growth as consumer and investor confidence recedes. Private sector credit in Australia rose only 0.2% in August confirming subdued prospects for major Australian banks which all traded weaker today. 

4.06pm: Meanwhile, here's a quirky one about surfing - or rather, a business making money out of it. 

4.03pm: While we await the final numbers for stocks, here are a couple of lighter items to muse over. First, as we know Friday is often a time when employees think hardest about finding a new job, here's James Adonis on his blog, Work in Progress.

3.57pm: Since we love size and scope - the ASX200 is about to close pretty flat for the day. But for the week, it's up about 1.3 per cent. For the month, though, it's down about 6.8 per cent - its sixth monthly decline in a row. For the quarter (and for bonus points), it's off about 13 per cent, its worst quarterly return since the final three months of 2008 - the depths of the global financial crisis.

3.53pm: Actually, just a 29 per cent chance of a rate cut on Tuesday, according to Credit Suisse – the lowest chance since last rates meeting on September 6.

3.43pm: The Reserve Bank board is meeting on Tuesday for its regular decision on interest rates, but anxious mortgage holders can almost certainly relax over the long (NSW) weekend as the central bank is widely expected to keep rates unchanged for a 10th straight time.

All 22 economists polled by Reuters today say the RBA will keep the cash rate steady at 4.75 per cent. Futures even imply a one-in-four chance of a cut next week, but analysts believe it would take a truly drastic global event over the next few days to prompt such a sudden turnaround in policy.

3.21pm: Gold jumped more than 1 per cent earlier after Germany's approval for expanding the euro zone bailout fund offered temporary relief to investors, but the precious metal is still heading for its worst monthly decline in three years.

Spot gold was recently up $US10.05 at $US1624.45 an ounce. Despite today's gain, over the month the price is down 11 per cent, the worst performance since October 2008 when it tumbled 17 per cent after the collapse of Lehman Brothers.

3.02pm: And more from Asia: Reuters is reporting that the Singapore Stock Exchange, which recently failed in its attempt to merge with the ASX, is tying up with London's main bourse to make a joint bid for the London Metal Exchange, according to an unnamed source.

  • The world's largest metal market is seeking a suitor in a deal that could be worth 1 billion pounds ($1.6 billion). 
  • The consortium has appointed a bank to advise it on the bid, the source added, with the auction expected to attract rival offers. 
  • The joint bid underscores the ambitions of both exchanges to diversify into the fast growing space of metals trading, as traditional businesses of equity and derivatives trading faces increasing competition. 

Both the SGX and the LSE are coming off of failed merger attempts, which took place earlier this year amid a flurry of exchange auctions that were prompted by loss of market share across the industry to electronic trading and other platforms. 

2.58pm: Meanwhile Hong Kong's Hang Seng index is on track to post its biggest quarterly decline in 10 years, losing another 2.1 per cent today, or 21 per cent over the past three months. Stocks in Shanghai are faring a little better, down 0.4 per cent today, which brings the quarterly losses to 15 per cent.

2.44pm: Time for a heads-up on ... time. This weekend daylight saving time starts in NSW, Victoria, Tasmania and the ACT, but, once again, not in Queensland. Sunday morning at 2am clocks will jump one hour ahead. 

For the next six months that's an extra hour of daylight in the evenings, and perhaps an additional hour of sleep in the mornings before the sun drives the kids out of bed.

2.02pm: The market is on the up again - sitting just a smidge below 4000. The S&P/ASX200 is now down 8.7 points, or 0.2 per cent, to 3999.6. The All Ords is down 5.9 points, or 0.1 per cent, at 4062. 

1.49pm: And an update on Asian markets... Tokyo's Nikkei 225 index is up 0.25 per cent for the day and the Hang Seng is down 1.74 per cent. Broader falls across the region extended the worst monthly performance since the most volatile days of the global financial crisis in October 2008, with Chinese shares racking up sharp losses, Reuters reports.

1.23pm: Here are some key figures in early afternoon trade: Financials, down 0.8 per cent, are leading the market lower, offsetting gains in the energy sector, up 0.9 per cent, and telcos, up 0.7 per cent. Materials are down 0.5 per cent. 

Leading the losses among the banks is Westpac, down 2 per cent, followed by ANZ, off 1.1 per cent. Qantas has lost 1.8 per cent and Rio Tinto has shed 1.6 per cent.

The top gainer among the biggest 50 stocks of the market is WorleyParsons, up 3.5 per cent, followed by QBE, which is positng a 2.7 per cent rise. Telstra is up 1 per cent. 

The dollar is buying 97.54 US cents, down from this morning's start of trade at 97.82 US cents.

12.59pm: The ASX200 is now trading firmly below 4000 points, down 0.5 per cent, despite HSBC's China PMI coming in slightly higher than in the earlier 'Flash' release - which should dispel some of the worries of a hard landing in China's economy. However, Dow futures are trading 40 points lower and S&P500 futures are 5 points off, indicating some losses at the start of trade on Wall Street later today. FTSE100 futures are also down. 

AAP quotes RBS Morgans Reynolds Equities director Markus Mueller as saying weak Dow futures were likely to spark some profit-taking, amid generally light trading volumes.

"We had some good news out of Europe, definitely that’s helped a little bit but it wasn’t good enough,’’ he said. ‘‘It’s a step in the right direction but I think everyone’s a little bit frustrated with the snail pace (at which Europe is acting to resolve the euro-zone debt crisis)."

Then again we're in an extremely volatile environment, where the market regularly roller-coasters between gains and losses, sometimes several times in a session.

"Sentiment ebbs and flows very quickly nowadays," says Tim Schroeders from Pengana Capital in Melbourne. 

"People are still very uncertain about the macroeconomic outlook at this stage and risk-off prevails until greater certainty comes to light in policy response."

12.49pm: Every Friday around about now, we publish Richard Hemming's Under the Radar column. As the name implies, the column looks at the many listed minnows that often get missed. Today Richard looks at the rapid growth of Conquest Mining, and what's happening in mergers & acquisitions. Worth a look.

12.39pm: HSBC's China purchasing managers' index shows the factory sector contracted slightly for a third consecutive month in September due to weaker global demand, while factory inflation quickened to a four-month high, Reuters reports. 

  • The HSBC purchasing managers' index, which previews business conditions in a range of industries before official monthly output data, was at 49.9 in September, unchanged from August. 
  • The final reading for HSBC's China PMI is stronger than the flash PMI reading of 49.4 published last week. 
  • In PMI releases around the world, the 50-point level typically demarcates expansion from contraction in factory output. 

"This implies that although the lagged effects of credit tightening will continue to cool industrial activity in the months ahead, there is little need to worry about a sharp slowdown," said Qu Hongbin, China economist at HSBC. 

HSBC believes a PMI reading of as low as 48 in China still points to annual growth of 12-13 per cent in industrial output and a 9 percent expansion in gross domestic product.

Qu expects China's economic growth to hold up at around 8.5-9 percent in the coming years, despite the global slowdown. 

12.27pm: Broker downgrades are also weighing on Goodman Fielder, whose shares have slumped by a record after selling new stock at a discount.

The shares fell as much as 23 per cent, the biggest decline on an intraday basis since its December 2005 initial public offering, Bloomber notes. Stocks were recently 15.3 per cent lower at 46.5 cents. 

"Our confidence toward the future outlook of Goodman Fielder has been dented," Merrill Lynch analysts write in a note. 

"We are surprised the company would do an equity raising before providing detail on the outcomes of the group’s strategic review," they wrote, cutting their recommendation to "underperform" from ‘‘neutral.’’ 

Nomura cut its rating to "reduce" from "neutral," citing the timing and size of the capital raising, which is being done through a five-for-12 entitlement issue.

Goodman Fielder has lost 63 per cent of its market value this year. 

12.13pm: So much for the early optimism: the market has slipped into the red. The ASX200 is down 1.2 points at 4007.1, and looks in rapid decline.

12.01pm: Australian households and businesses poured more funds into bank accounts in August as worries on the outlook for the global economy intensified, BusinessDay's Eric Johnston reports. 

  • The run-up in deposits coincided with sharp losses across Australian equities during the month as fractures in Europe deepened while concerns spread on the health of the US economy. 
  • Figures released this morning by bank regulator the Australian Prudential Regulation Authority showed $27 billion in deposits was channelled into the banking system during August, with most of the growth coming from business customers. 

11.23am: This news might move the Aussie dollar - although it hasn't yet. Reuters just reporting: 

  • Japanese Finance Minister Jun Azumi said on Friday that the government will boost its foreign exchange intervention fund by 15 trillion yen ($195 billion) through a third supplementary budget. 
  • It will also extend until December a rule requiring forex traders to report on trading volumes, Azumi told a news conference after a cabinet meeting. 
  • Aussie dollar was recently buying just under 75 yen 

11.15am: Meanwhile, we know the NBN is real, because it's just about to start sending out bills. That item is from BusinessDay's Lucy Battersby, and perhaps her next item will be about the first customer complaints. Oh well, it is Friday. 

11.10am: Here's some of AAP's stocks opener:

  • Wealth Within analyst Janine Cox said she had expected shares to lift higher than they have so far after Germany’s parliament ended weeks of speculation about Europe’s rescue fund overnight, by approving an expansion of the eurozone’s rescue fund after the local market closed. 
  • "There’s still a situation that six other countries have to vote yet (on the eurozone bailout) so it’s not a done deal yet so that’s why I think people are just waiting to see what happens,’’ she said. 
  • The spot price of gold in Sydney was $US1,623.05 per fine ounce, down $US1.94 from Thursday’s close of $US1,624.99. 
  • The energy sector led the market at the open, rising 0.68 per cent after world oil prices picked up Thursday. Woodside Petroleum rose 20 cents to $32.34 and Santos added seven cents to $11.34. 
  • Platinum metals producer Aquarius Platinum was the strongest stock on the ASX 100, jumping 8.1 per cent to $3.07. 
  • As noted below: Grocery brand group Goodman Fielder was the weakest stock on the same index, plunging 18.9 per cent to $44.50 after announcing it had raised about $190 million through an institutional capital raising. 

11.04am: As it's Friday, we must have some real estate news. This just in on BusinessDay: (More to come here soon.)

  • Home prices posted another month of losses in August but values remained flat in Sydney as the nation's biggest city continued to buck the national trend, says new data. 
  • The value of homes overall fell 0.4 per cent during August, which is the smallest loss since April this year, according to the RPData-Rismark national home values survey released today. 
  • Perth led the losses with a 2 per cent cent fall, closely followed by Canberra where home values lost 1.8 per cent. Melbourne and Brisbane lost 0.2 per cent, Adelaide dropped 0.6 per cent while Darwin saw a modest rise of 0.2 per cent. 

10.49am: Meanwhile, Fortescue is making a little news of its own. This just in from Reuters:

  • Fortescue Metals Group said iron ore production for the September quarter had been strong and shipped volumes would be more than 12 million tonnes. 
  • The average selling price for the period would be around $160 per tonne subject to final adjustments. 
  • The firm also said its iron ore expansion programme was progressing on time and on budget. 

10.47am: Among the majors: BHP is up 0.9 per cent, with Macquarie up 2.6 per cent. Fortescue, meanwhile, pared some of its hefty losses for the quarter, gaining about 3.8 per cent in early trading. 

10.42am: Clearly investors aren't pleased with Goodman's capital raising plans, revealed earlier this week.

10.40am: Among the movers is Goodman Fielder. It's come out of a trading halt and promptly fallen as much as 23 per cent to as low as 42 cents. 

10.32 am: Also on the Top 50 going into today's trading. Here are the worst performers, led by Alumina down 31 per cent and Fortescue - which has been hammered in the past couple of weeks - off almost 30 per cent. Will have to do the sums, but that might equate to a couple of billion (three?) dollars in paper losses for Twiggy Forrest. (Source: Bloomberg)

10.23am: Mostly higher for the main sub-indexes early on. Energy stocks were up 1.3 per cent, financials added 0.3 per cent and while the health sub index was down 0.7 per cent. Gold stocks were up 0.8 per cent while metals and mining stocks gained 0.5 per cent. Telecommunications stocks added 0.9 per cent, led by Telstra. 

10.17am: While the market hovers between gains and losses early on, here's a sobering chart of the top 50 stocks during the current quarter which ends today.

What's particularly interesting is that the overall market of the top 50 is down 12.7 per cent going into today's trading, and that only five companies managed to post an increase for the three months. 

10.15am: Slightly contrary to the news out overnight, the budget deficit for the fiscal year is slightly better than expected. Here's the AAP take on what's just been announced:

  • The federal government says the final budget outcome for 2010/11 was an underlying deficit of $47.7 billion. 
  • This was a modest improvement on the $49.4 billion deficit forecast in the 2011/10 May budget. 
  • "(It) shows that despite the major impact on budget revenues from the global financial crisis, recent natural disasters and a strong Australian dollar, Australia’s public finances remain amongst the strongest in the developed world," Treasurer Wayne Swan and Finance Minister Penny Wong said in a joint statement on Friday. 

10.06am: Local stocks are up but only modestly in early trade. All Ords have risen 0.1 per cent, or 3.4 points, to 4071.3, and the benchmark S&P/ASX200 is 0.1 per cent higher, or 3.8 points, to 4012.1. 

9.36am: New Zealand's credit rating was cut one step to AA by Fitch Ratings, which cited the nation's high level of debt and persistent current account deficit. The country's 83 per cent net debt to grossdomestic- product ratio in US dollar terms at the end of last year compares with 10 per cent for the median of AA rated nations.

9.30am: Good economic news out of the US last night. Claims for jobless benefits falling to a five-month low last week and growth a touch stronger in the second quarter than previously estimated. 

Initial claims for state unemployment benefits fell 37,000 to 391,000, the Labor Department said, well below economists' expectations for 420,000. Although still a big number, it wasn’t as big as many feared it would be, giving markets a boost.

Separately, the Commerce Department said US gross domestic product grew at an annual rate of 1.3 per cent in the second quarter, up from the previously reported 1.0 per cent. 

9.25am: Greece, Europe and markets around the globe breathed a sigh of relief last night when Germany voted overwhelmingly in support of expanding the European Financial Stability Facility.

Germany along with Cyprus and Estonia approved increasing the fund to 440 billion euros, but it not over the line yet. Thirteen countries have ratified the agreement, with four still to vote. Austria will vote on Friday (local time) with Malta, the Netherlands and Slovakia to follow. 

9.21am: The federal treasurer today released figures which will show a $2 billion hole in the 2010-2011 federal budget caused by lower-than-expected company tax receipts and a shortfall in tax collected from wages.

The federal government announced today the final budget outcome for 2010/11 was an underlying deficit of $47.7 billion.

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