Tag Archives: slide

Shares in India’s Jet slide on Etihad deal worries

Jet-AirwaysMUMBAI: Shares in Jet Airways plunged nearly six percent Friday on concerns over whether India’s second largest private airline will clinch a stake sale to Abu Dhabi-based Etihad Airways.

Shares fell 6.19 percent before recovering slightly to close down 5.81 percent at 527.35 rupees as a media report said “fresh hurdles” had emerged in talks with the Gulf carrier over its plans to buy a stake in Jet.

“Etihad has put a host of conditions, including an option to buy up to 49 percent stake in Jet,” the Business Standard said on Friday, citing an unnamed source.

The Gulf airline also wants operational control and a representation on Jet’s board, the newspaper said. The Indian carrier declined to comment on the report.

Several Indian airlines have been in talks with foreign carriers after the government last year opened up the aviation sector further to allow non-Indian airlines to invest in their counterparts in the country.

Indian carriers need money to fund expansion and cut debt after years of losses caused by intense air-fare battles and rising fuel costs.

The Jet-Etihad development comes after Asia’s biggest low-cost airline, AirAsia, this week announced plans for a no-frills carrier in the country with India’s Tata conglomerate.

The venture awaits government and regulatory approval.

Copyright AFP (Agence France-Presse), 2013

Fortescue shares slide on profit numbers

By finance reporter Elysse MorganUpdated February 20, 2013 14:38:15

Profit at Western Australian iron ore company Fortescue Metals almost halved in the first six months of this financial year, as iron prices plummeted.

First half net profit fell 40 per cent to $462 million.

The company says its expansion plans are continuing and increased production helped to offset the record slump in iron ore prices last year.

Chief executive Nev Power also says there has been a better than expected recovery in iron ore prices over the last few months.

“It has recovered more strongly than we anticipated, and I think there are a number of underlying factors in that there is a very increased confidence in the new leadership in China to continue the urbanisation and infrastructure building and that’s translating to a lot of confidence and has restarted a lot of construction activity in China,” he observed.

Investors will not receive an interim dividend, but the company says it will consider a full-year dividend if iron ore prices improve.

Investors are selling down the stock as a result, it was off 3.6 per cent to $4.995 by 2:36pm (AEDT).

Topics: business-economics-and-finance, company-news, iron-ore, australia, wa

First posted February 20, 2013 13:05:35

Deposit rates set to slide as funding costs fall

Bendigo and Adelaide Bank says interest rates on deposit accounts may be about to fall as other sources of funds become cheaper and more accessible for banks.

The comments from the bank’s managing director Mike Hirst come as Bendigo and Adelaide made an after tax profit of $189.4 million in the six months to the end of December.

That was up 227 per cent compared to the same period the year before.

The lender’s cash profit, which is the banking industry’s preferred measure of earnings because it excludes one-off accounting gains and losses, rose 4.4 per cent to $169.7 million.

Mike Hirst told an investor briefing that strong competition for deposits had previously pushed up funding costs, as banks sought to avoid wholesale funding, putting pressure on profit margins.

However, Mr Hirst said wholesale funding had become cheaper in recent months, as world markets stabilise and he expects the big four banks to strike more of a balance between funds from deposits and wholesale markets as a result.

“I would expect that, as long as there’s continued strength in those wholesale funding markets, I would think there will be some abatement of the pricing around retail deposits,” he said.

Competition for deposits has also been cited by banks as a major reason for not cutting mortgage rates in line with the central bank’s cash rate.

Bendigo’s net interest margin, a measure of its profits on loans, increased by 9 basis points over the six months to December, reflecting lower funding costs.

The results sent the bank’s shares 3.25 per cent higher to $10.17 around the close of trade.

Mr Hirst was still cautious about the second half of the financial year, due to uncertainty in financial markets.

“Clearly, we think there is going to be continued low credit growth,” he told analysts.

“Especially around things like consumer lending and credit cards, people are looking to clean up their personal balance sheets.

“That is going to be a challenge for us, but one I think we can meet through our expanding network and value proposition.”

A fully franked interim dividend of 30 cents per share will be paid to investors, consistent with the same period in the previous year.


Topics: consumer-finance, business-economics-and-finance, banking, money-and-monetary-policy, australia

First posted February 18, 2013 16:30:57

BHP chief quits after profit slide

Updated February 20, 2013 14:28:55

BHP Billiton chief executive Marius Kloppers will stand aside in May, after the company’s profit halved.

The world’s biggest miner posted a 58 per cent fall in first-half net profit to $US4.24 billion, while the company’s underlying earnings – which excludes one-off write-downs and gains – dropped 43.4 per cent to $US5.68 billion.

The result came in broadly in line with average analyst forecasts of a $US5.72 billion underlying profit, according to a Bloomberg survey.

BHP Billiton’s revenue fell 14 per cent compared to the same period a year earlier to $US32.2 billion, as commodity prices generally softened.

The company says its profit was squeezed not only by the fall in commodity prices, but also due to the strength of currencies in major producing nations such as Australia and Chile, which pushed up local costs.

BHP Billiton also confirmed to the ABC that it was one of the companies that paid a Minerals Resource Rent Tax instalment to the Federal Government in January.

The miner says it paid a total of $77 million in MRRT in respect of the first six months of the tax being in operation.

However, the company says it is moving to contain costs, and also announced or completed $US4.3 billion in asset sales in the half-year to December 31.

BHP Billiton also says it expects a “modest improvement in the global economy” over the next 12 months as stimulus stabilises China’s growth and the US economy makes steady progress.

However, this rise in growth is likely to be offset by an increase in the supply of key commodities as new or expanded mines come online, limiting upside in commodity prices.

BHP has been part of this increasing supply, with the company undertaking 20 new projects, most of which are expected to enter production before the end of the 2015 financial year.

Today’s announcement that Mr Kloppers will step aside from the company’s top job on May 10 has ended months of speculation about when BHP Billiton would install a new leader.

The mining giant’s new chief executive will be the company’s current head of non-ferrous Andrew Mackenzie, who joined BHP Billiton in 2008, after previous experience working with BP and Rio Tinto.

Mr Kloppers has been in the top role for around five-and-a-half years and with BHP Billiton for almost 20, and will stay with the company until October 2013 to assist with the transition.

BHP Billiton chairman Jac Nasser says Mr Kloppers has made the company safer and stronger.

“Marius was appointed chief executive just prior to the global financial crisis. Despite an exceptionally difficult economic environment during his tenure, Marius and his team have delivered for shareholders, significantly outperforming our peers in terms of total shareholder returns,” he said in a statement.

“He drove new investments into next generation opportunities including US onshore gas and liquids and created one of the most valuable companies in the world.”

BHP Billiton shares have not moved much in early trade in response to either the profit results or the departure of Mr Kloppers – on the Australian market, its shares were down 0.4 per cent to $38.84 by 10:25am (AEDT), with much larger falls for rival miners such as Rio Tinto which was down 1.2 per cent.

Fat Prophets commodities analyst David Lennox says that is because BHP’s profit was in line with analyst expectations.

“Overall, I think the market won’t be in any way surprised by the results that they have seen,” he told ABC News Online.

However, Mr Lennox says the timing of the leadership transition was probably somewhat earlier than many expected.

“It was, perhaps, a little bit of a surprise,” he said.

“We were aware that BHP had activated a succession plan to look at eventually replacing Mr Kloppers as CEO, and we do think that there may have been a little [more] time for that particular plan to be executed.”

Mr Lennox says Marius Kloppers’s departure was under very different circumstances to that of former Rio Tinto boss Tom Albanese.

“There were very good reasons I guess for Tom Albanese to stand aside, and that was basically the $14 billion in write-downs out of the balance sheet, I guess a CEO can’t preside over a company and lose that quantity of value out of his balance sheet,” he explained.

“For BHP there’s no such circumstances, the write-downs were very controllable, very manageable.”

However, fund manager Roger Montgomery says Marius Kloppers has also been successful at destroying shareholder value in different ways.

“In 2006 the company earned $13.6 billion. In 2013 analysts estimate earnings will be $13.8 billion and, despite the fact there has been no net growth in profits, investors have contributed massive amounts of additional equity – from $32 billion in 2006 to $64 billion in 2012 and debt has risen from $12.9 billion to $27.6 billion,” he wrote in a note on the results.

“In other words BHP is significantly less profitable than it was in 2006.”

Topics: business-economics-and-finance, company-news, corporate-governance, mining-industry, australia, wa

First posted February 20, 2013 08:38:04

Share gains held back by retail slide

Falls among retail stocks, inspired by David Jones’s disappointing sales result, are holding back the broader share market.

The All Ordinaries index was down 1 point to 5,023 shortly before 11:00am (AEDT), and the ASX 200 was 2 points lower at 5,001.

Shares in David Jones fell 2.2 per cent after the company reported a fall in its second quarter sales.

Its main rival, Myer was also down 1.5 per cent.

The major supermarket and discount department store groups, Woolworths and Wesfarmers, were also a little lower.

Shares in the engineering services firm, Downer EDI surged more than 12 per cent, after it reported a rise in its half-year profit.

Rio Tinto was up 1.5 per cent ahead of its half-year results, which will be released late this afternoon after the market closes.

BHP Billiton was just around 0.8 per cent higher.

Amongst the banks, NAB was down 1 per cent, ANZ and Commonwealth Bank shares were 0.5 per cent lower, while Westpac was up 0.2 per cent.

The Australian dollar was buying 103.51 US cents.

Topics: business-economics-and-finance, markets, currency, stockmarket, australia

First time buyers lead housing finance slide

The number and value of home loans taken out in December fell, with first home buyers accounting for less than 15 per cent of new lending and investors also reluctant to borrow.

The Bureau of Statistics December housing finance data show a 1.5 per cent fall in owner-occupied home loans, to 45,335, seasonally adjusted.

The decline was led by a slide in the number of loans issued for the purchase of established homes, down 2.1 per cent, with loans for the purchase or construction of new dwellings both rising.

There was also a fall in the value of loans being taken out, with a 2.7 per cent slide in the amount of money sought for home purchases by owner-occupiers.

The proportion of loans going to first home buyers fell from 15.8 per cent in November to 14.9 per cent in December.

That is the lowest proportion of first time buyers in the market since June 2004, and less than half the peak of a 31.4 per cent market share seen in May 2009 when the Federal Government’s first home buyers boost scheme was in operation.

TD Securities strategist Alvin Pontoh says the fall in first home buyers is likely to be temporary, as it is a response to a change in New South Wales Government housing grants.

“The result was dragged by an ongoing ‘overhang’ from the ending of a NSW $7,000 first home owner grant in October (loans fell a sharp -3.2 per cent month-on-month in NSW, -9 per cent across the fourth quarter),” he wrote in a note on the data.

“As that drag abates, total lending should stabilise and then pick up to reflect the additional monetary policy support (two rate cuts in the fourth quarter) and better affordability.”

The value of loans to residential property investors also slipped 2.4 per cent in the last month of 2012.

RBC Capital Markets strategist Michael Turner says the continued weakness in home lending a worrying sign for the broader economy.

“The optimistic scenario is one in which residential construction is able to pick up the growth baton, if you like, from a fading resource sector,” he said.

“So, definitely, this data is certainly important with regards to gauging the health of the housing market and, thus far, they’re not pointing to a particularly strong recovery.”

Mr Turner says it appears people want to see even lower interest rates before venturing into the housing market.

“Given the cash rate by December was 175 basis points lower than its recent peak, it’s been a little bit surprising – the lack of response in the housing market,” he said.

“There’s still probably some effects to come through – we’ll probably still see housing finance rise a little bit over the next few months – but we doubt there’ll be a huge response.”

Topics: business-economics-and-finance, economic-trends, housing-industry, money-and-monetary-policy, australia

First posted February 11, 2013 11:47:11

Australia home loan approvals slide

 There had been hopes that lower borrowing costs may attract more buyers to the property market Australian home-loan approvals are down for a third month despite the central bank cutting its main interest rates.

Approvals fell 1.5% in December from November, the statistical bureau said.

Australia’s central bank cut interest rates four times in 2012 in an attempt to boost investment and growth in non-mining sectors such as construction.

However, analysts said many mortgage lenders had not passed on the lower borrowing costs, while consumers feared that rates may climb again.

“First-home buyers need to know that rates are going to stay down for them to have the confidence to jump into the market,” said Brian Redican, a senior economist at Macquarie.

Passing on benefits

In an effort to offset slower global growth and stimulate the domestic economy, Australia’s central bank lowered its key interest rate from 4.25% at the start of last year to 3% in December.

However, mortgage costs have taken longer to come down.

According to its website, ANZ Bank’s variable interest rates range between 5.7% per annum and 6.4%. Its fixed rate for a five-year mortgage is 5.99% per annum.

Meanwhile, Westpac’s variable rate is around 5.86% per annum, while its fixed rates are also above 5%.

Commonwealth Bank and Macquarie’s rates are also above 5% per annum.

Analysts said that the central bank, the Reserve Bank of Australia (RBA), needed to do more to ensure that its rate cuts were fully passed on the home buyers.

“The banks are not going to cut variable rates on their own. Only the RBA can do all that,” Westpac’s Brian Redican said.

Building approvals post surprise slide

Building approvals ended 2012 with a solid fall that surprised economists who were generally expecting a modest rise.

Official figures from the Bureau of Statistics show the number of dwellings approved for construction fell 4.4 per cent in December, more than offsetting a 3.4 per cent rise the previous month.

More worryingly for analysts, the fall was split fairly evenly between a 3.3 per cent decline in the more stable detached house figures, and a 5.4 per cent slide in the typically volatile non-house dwellings category (mainly apartments).

However, Westpac’s economics team says the numbers need to be interpreted with caution, because the summer period generally sees large revisions to the initial figures, and because the fall was almost exclusively centred in Victoria, which had a 12.7 per cent slide in house approvals.

“On the one hand there may have been a significant policy-induced ‘hole’ in approvals in the month,” the bank’s economists wrote in a note.

“The Victorian state government changed its incentives for first home buyers in 2012 from a grant of up to $13,000 to significant stamp duty concessions (both only available on properties up to $600,000).

“However, the transition period was not smooth with the grant phasing out at the end of June and stamp duty concessions coming into effect in January. The gap may have encouraged many to delay building, particularly late in the year.”

The bank says that explanation is undermined somewhat by separate figures showing that Victorian first home buyer activity held up last year, despite the policy changes.

Queensland had the best rise in December dwelling approvals, with a 7.9 per cent rise overall.

Over 2012, private sector house approvals were down 3.8 per cent and non-house approvals surged 31.7 per cent, reflecting a trend towards high density living.

Master Builders Australia’s chief executive Wilhelm Harnisch says the construction sector is hoping lower rates will boost demand for new homes, but that more rate cuts may be needed.

“The industry is looking to last year’s rate cuts to bolster new home buyers’ interests in the coming months and provide a much needed boost to the industry,” he noted in response to the ABS figures.

“The December building approvals figures should give the Reserve Bank of Australia cause to closely look at another rate cut at the board meeting tomorrow.”

Topics: building-and-construction, business-economics-and-finance, economic-trends, housing-industry, australia, vic

First posted February 04, 2013 12:37:10

Job ads slide again

Job ads have fallen for the 11th straight month, as rate cuts so far appear to have failed to boost employment.

ANZ’s monthly job ads figures fell 0.9 per cent in January, following on from a steep 15 per cent slide in the last four months of last year.

The current level of job advertising is down 30 per cent on its most recent peak in April 2011, with an average of just under 134,000 ads per week, seasonally adjusted.

ANZ says the January figures need to be read with some caution because the summer holiday period is subject to a lot of volatility.

The bank says the February and March figures should provide a better gauge of whether the jobs market is continuing to weaken or starting to bottom out.

However, the bank’s head of Australian economics, Ivan Colhoun, says previous falls in job ads are likely to feed into a higher unemployment rate when the Bureau of Statistics releases the official labour force figures for January on Thursday.

“ANZ expects the unemployment rate to have risen slightly to 5.5 per cent and for employment to have risen by around 15,000,” he noted in the report.

“We expect growth in the Australian economy to be below trend this year as the economy transitions towards a lower dependence on mining investment.”

One area still heavily dependent on, and benefitting from, mining investment is the Northern Territory, where newspaper ads were up 7 per cent.

“The Northern Territory has continued to do particularly well due to the size of its mega-LNG projects relative to the state’s GDP,” Mr Colhoun observed.

“In the other mining states (Western Australia and Queensland), job advertising trends have continued to ease, albeit at a slightly reduced rate in trend terms in January.”

Despite the continued fall in job ads, ANZ expects the Reserve Bank to keep official interest rates on hold when it meets tomorrow, but to cut again later this year as unemployment edges towards 5.75 per cent.

Topics: business-economics-and-finance, economic-trends, money-and-monetary-policy, unemployment, australia

First posted February 04, 2013 11:30:03

Facebook shares slide on profit fall

Facebook has reported a sharp drop in profits, prompting a fresh decline in the share price of the world’s biggest social network.

The company says the drop in profit is partly due to increased spending on research and development.

The social network site made a profit of over $60 million in the final three months of 2012, compared with nearly $300 million a year earlier.

The results triggered a 5 per cent slide in Facebook shares in after-hours trading in New York.

Topics: business-economics-and-finance, company-news, media, social-media, united-states

Manufacturing starts year in steeper slide

The manufacturing sector has started 2013 in a worse state than it ended 2012, according to an industry index.

The Australian Industry Group’s Performance of Manufacturing Index dropped 4.1 points to 40.2 in January, falling even further below the 50-point level that separates expansion from contraction.

The fall in the index was driven by a slide in petroleum, coal, chemical and rubber products, wood and paper products improved, while all other sub-indices recorded a slower pace of contraction in January than in December.

Manufacturing overall has now been contracting for 11 months in a row, and there are no signs of improvement, with new orders down 6.3 points to 39.4.

The report shows input rises are rising (58.5) and selling prices continue to fall (40), putting further pressure on manufacturer’s profit margins.

The Australian Industry Group’s chief executive Innes Willox says the interest rate cuts so far have not been enough to offset other pressures the sector is facing.

“The rate cuts to date have not offset the combined impacts of the substantial contraction in fiscal policy along with the structural challenges due to more intense international competition, the high dollar, ongoing increases in energy costs and increasingly uncompetitive unit labour costs,” he noted in the report. 

“Fortunately, the Reserve Bank has scope to further reduce interest rates to help reverse the slowing in the domestic economy.”

Topics: business-economics-and-finance, economic-trends, manufacturing, money-and-monetary-policy, australia

First posted February 01, 2013 09:33:28

Iron ore prices slide

The iron ore spot price has posted its biggest one-day fall in around 13 months on speculation Chinese demand will ease.

The price for industry standard iron ore in China fell 5 per cent overnight to $US145 a tonne, after briefly hitting highs near $US160 a tonne last week.

The spot price for iron ore has surged 68 per cent from a September low of $US87 US dollars a tonne, as China restored its stockpiles.

However, there is concern among investors that as China’s weather warms and domestic production ramps up, demand for iron ore imports may ease.

China is also nearing its biggest annual holiday – the Chinese New Year.

Analysts are anticipating the spot price of iron ore will average out at $US120 a tonne this year.

Topics: business-economics-and-finance, iron-ore, markets, trade, australia, china

Building approval slide adds to rate cut case

Updated December 04, 2012 12:35:42

A larger than expected fall in building approvals has further added to the case for an interest rate cut.

Bureau of Statistics figures show the number of dwellings approved during October fell 7.6 per cent.

That was split between an 18 per cent slump in the highly volatile non-house sector (which is generally skewed up or down by the approval of large apartment developments), and a 1.5 per cent slide in house approvals.

Economists had generally been expecting a more modest 2 per cent fall.

However, September’s 7.8 per cent gain was revised up to a 9.5 per cent jump, meaning October’s fall was coming off a slightly higher base than previously thought.

The more stable trend figures have housing approvals falling 0.3 per cent in October, with private sector houses up slightly and the non-house sector down 2.4 per cent.

Westpac’s economics team, which is one of those tipping a Reserve Bank rate cut today, says the figures are not actually as bad as they look on the face of it.

“As disappointing as the October drop in approvals is, it is still well within the range of monthly volatility for this series and as such does not necessarily mark the end of the uptrend apparent since mid-year,” the economists wrote in a note on the data.

“Instead it highlights the uneven, patchy nature of the current recovery: not just month to month but by segment and state as well.”

On an annual basis, private house approvals are up 4.6 per cent on this time last year, while unit approvals are up by nearly two-thirds.

Approvals in New South Wales are 32.5 per cent higher than this time last year, Queensland approvals are up 25.2 per cent, Victoria 22.4 per cent and Western Australia 12.3 per cent.

However, South Australia has seen a 14.5 per cent slide in approvals since October last year, and Queensland, Victoria and South Australia all saw approvals dip in the month of October.

Topics: business-economics-and-finance, economic-trends, building-and-construction, housing-industry, money-and-monetary-policy, australia

First posted December 04, 2012 11:48:29

Melbourne home price slide offsets gains elsewhere

Updated December 03, 2012 13:38:36

Melbourne has dragged down the nation’s home price performance in November, leaving the national market flat overall.

RP Data – Rismark’s Home Value Index was unchanged for November, with a 1 per cent fall in Melbourne values offsetting modest to strong gains in the other capital cities.

Canberra (1.3 per cent), Darwin (1.1 per cent) and Perth (1 per cent) recorded the best gains, with Brisbane and Adelaide also up 0.5 per cent.

Sydney recorded a tepid 0.1 per cent gain which, combined with the steep fall in the nation’s second biggest housing market, left the index flat overall.

Hobart home prices also rose just 0.1 per cent, to be down 7 per cent over the past year.

While the national capital city home price index is down 0.1 per cent over the year to November, that has been driven mostly by a 2.5 per cent fall in Melbourne, and even steeper declines in Adelaide and Hobart.

RP Data’s senior research analyst Cameron Kusher says it looks like some markets have hit the bottom of their price cycles.

“Melbourne perhaps hasn’t bottomed, but markets which have been under-performing for a long period of time, like Sydney, like Brisbane, like Perth, certainly do appear to have reached the bottom and each of those cities has actually seen values now increase over the last 12 months,” he said.

“So, broadly speaking, I think we’re pretty close or at the bottom of the housing market.”

He says it is those cities that performed best during 2009 and 2010, particularly Melbourne, that are likely to show continued weakness, even as other markets pick up.

“Home values in Brisbane and Perth remain below where they were five years ago, whereas the other mainland cities have all increased over this period,” he noted in the report.

“This has meant that, relative to the other capital cities, Brisbane and Perth have experienced affordability improvements and subsequently we may see them become more popular from both an owner-occupation and investment perspective.”

Topics: business-economics-and-finance, economic-trends, housing-industry, money-and-monetary-policy, australia, vic

First posted December 03, 2012 11:05:23

Job ad slide raises rate cut chances

Updated December 03, 2012 12:05:15

A widely watched survey shows job ads fell again in November, hinting unemployment will rise further and increasing the prospects of an interest rate cut this week.

The ANZ monthly survey shows the number of job ads fell 2.9 per cent in November, following a 4.6 per cent drop in October.

It is the eight month in a row that jobs ads have declined, leaving the number of advertisements looking for workers at its lowest level in almost three years.

However, the unemployment rate has only ticked 0.5 percentage points higher from its most recent low in December 2010, to 5.4 per cent in October.

ANZ’s head of Australian economics Ivan Colhoun says the fall in job ads is likely to translate into higher unemployment, particularly if the Reserve Bank does not lower interest rates further.

“Without a solid pick-up in the non-mining sectors as the mining investment boom winds back through 2013, the unemployment rate is set to drift higher to 5.75 per cent by mid-2013,” he forecast in the report.

“Without further monetary policy easing, the unemployment rate may rise towards 6 per cent by the end of 2013.”

The bank’s data on newspaper job ads can be broken down state-by-state, and shows that demand for workers was weakening most in New South Wales, Western Australia and Queensland.

However, job ads rose a further 3 per cent in the Northern Territory, on the back of steep increases of 30-40 per cent in September and October.

Ivan Colhoun says the fall in job ads in the two main mining states over the past six months has been particularly sharp and concerning.

“Over this period, job advertisements in Western Australia have fallen, on average by 6 per cent each month and in Queensland the average monthly decline has been around 4 per cent,” he observed.

“The decline in newspaper job advertisements in Western Australia has been particularly sharp over the last three months, falling a total of 22 per cent.”

Topics: business-economics-and-finance, economic-trends, money-and-monetary-policy, unemployment, australia

First posted December 03, 2012 11:31:44

Wall Street stocks snap six-week slide

New York: US stocks solidly snapped a six-week slide on Friday with gains topping three per cent, the best rise in five months.

In the holiday-shortened week, the Dow Jones Industrial Average jumped 3.35 per cent in four trading sessions to finish Friday at 13,009.68 points.

The tech-rich Nasdaq leaped 3.99 per cent to 2,966.85.

And the Standard & Poor’s 500-stock index, a broad measure of the markets, gained 3.62 per cent at 1,409.15.

Article continues below

The Thanksgiving Day holiday that shuttered US markets on Thursday and shortened the session on Friday also gave a break to Congress ahead of negotiations with the White House on the fiscal budget.

Unless President Barack Obama and Democratic and Republican lawmakers can reach a compromise to avoid the fiscal cliff in January, the severe mandatory spending cuts and tax increases were predicted to tip the country back into recession.

“US stocks rallied this shortened trading week as optimism grew that a deal to avoid the fiscal cliff could be reached,” said IHS Global Insight economists Paul Edelstein and Nigel Gault.

The week featured housing data that pointed to a recovery finally gaining traction in the depressed sector more than six years after the market crashed.

Federal Reserve chairman Ben Bernanke, in a speech on Tuesday to the Economic Club of New York, warned that the looming fiscal cliff posed a “substantial threat” to US economic recovery.

On Friday stocks rallied sharply as consumers thronged to stores hunting for bargains on Black Friday, the traditional kick-off to the year-end holiday shopping season.

Consumer spending drives about 70 per cent of the economy’s activity.

Consumers “seem enthusiastic enough” according to the latest numbers on household confidence, said Gregori Volokhine at Meeschaert New York.

“Next week Congress gets back in session, President Obama will be back in the White House [and] many people will be watching whether there is any development on the fiscal cliff talks,” said Andrew Fitzpatrick at Hinsdale Associates.

In the week ahead, investors will keep an eye on a meeting on Monday of eurozone finance ministers and other creditors of debt-ravaged Greece to see whether Athens will finally get its much-delayed instalment of bailout aid.

“That will be something important for Wall Street to study — the sentiment is that work will get done on Monday,” Fitzpatrick said.

The rest of the week will be packed with indicators because it is the last week of the month and will include data postponed by the Thanksgiving holiday, FTN Financial analysts noted.

Among them will be durable goods orders and consumer confidence on Tuesday, and the Fed’s Beige Book report on economic conditions on Wednesday.

On Thursday, the government will publish its second estimate of third-quarter economic growth and weekly unemployment claims. The National Association of Realtors releases pending home sales numbers.

Personal income and spending data wind up the week’s calendar Friday.

All of the indicators, Volokhine warned, should be viewed with caution because “they are very influenced by Hurricane Sandy”, the disastrous superstorm that struck the northeast at the end of October and beginning of November.

Westpac beats expectations despite profit slide

Updated November 05, 2012 11:09:44

Westpac’s full-year statutory net profit has fallen 15 per cent to $5.97 billion, due to one-off tax gains last year.

The one-off benefit from a tax consolidation related to its St George takeover pushed last year’s profit higher, making this year’s result appear weaker.

However, the bank’s preferred measure of underlying cash earnings, which removes one-off items like the tax benefit, was up 5 per cent to $6.6 billion.

The bank recorded revenue growth of 6 per cent, but also saw costs grow by 4 per cent.

Westpac’s net interest margin – the difference between the rate it borrows money at and the rate it lends it out at – was 5 basis points lower at 2.17 per cent.

The bank says it has boosted customer deposits, which now fund 67.6 per cent of its loans.

Westpac’s chief executive Gail Kelly says that has been a key priority for the bank.

“At our half-year results, I stressed that a priority was growing deposits, so I am pleased that our total customer deposits grew 12 per cent or $38 billion this year, more than funding our growth in loans,” she noted in the report.

The announcement caps a mixed bag of profits for the big four banks – ANZ and the Commonwealth Bank both saw stronger profits, while NAB’s earnings fell sharply.

City Index analyst Peter Esho says Westpac’s result sits in stark contrast to NAB.

“Westpac’s cash earnings  of $6.6b are actually ahead of market expectations of around $6.4b, the dividend is in line and overall the earnings number looks world apart from that of National Australia Bank last week, literally,” he wrote in a note on the figures.

“The earnings beat might not look too significant on face value but, when taken in the overall context of what’s been a very challenging year for the financial system globally, we think the outcome is excellent.”

Gail Kelly says conditions for banks will remain challenging, with demand for credit low and savings high, but Westpac’s result shows it is well positioned to weather the downturn.

“It builds on the platform that we’ve established in the first half of this year,” she told a media briefing.

“The important point to make is this is not the result of one year’s work – this clearly reflects the effort over five years of hard work within the Westpac group.”

Westpac will pay a final dividend of 84 cents fully-franked, up from 82 cents in the first half.

The bank has outperformed its rivals on the share market today, with Westpac shares up 2 cents to $25.05 by 11:09am (AEDT), while the other major banks were down 0.7-1 per cent.

Topics: business-economics-and-finance, company-news, banking, australia

First posted November 05, 2012 08:39:11

Markets slide again in fear of fiscal cliff

By finance reporter Justine Parker and staffPosted November 09, 2012 09:22:05

International stock markets have declined for a second day, amid concerns about if and when Greece can unlock its latest round of bailout funds.

Investors are also unnerved by tax hikes and spending cuts in the United States due to kick in on January 1 next year, the so-called “fiscal cliff”.

There are doubts the US Congress can resolve its impasse on the measures before the end of this year.

While gun makers jumped yesterday on Barack Obama’s re-election, defence stocks have generally fallen, amid concerns of around $US500 billion more in defence cuts under the “fiscal cliff” measures.

The Obama administration had already cut almost that much out of the defence budget over the next decade in a bid to rein in a rampant deficit.

Leading defence stocks slumped an average 3.1 per cent on the day after president Obama’s victory, and fell just under 1 per cent again overnight.

However, there were also some more positive signs on the US economy – figures showed exports rose last month and claims for unemployment benefits fell by more than expected last week.

The benchmark S&P 500 index still lost 1.2 per cent to close at 1,378, the Dow Jones Industrial Average fell 0.9 per cent to 12,811, and the Nasdaq Composite Index dropped 1.4 per cent to 2,896.

Across the Atlantic, Bloomberg is reporting that Greece may have to wait until the end of the month to hear if it can get its latest round of aid.

The decision was expected on November 12.

The European Central Bank and the Bank of England both left their official interest rates unchanged, at 0.75 per cent and 0.5 per cent respectively.

In London, the FTSE 100 fell 0.3 per cent to 5,776, the DAX in Germany lost 0.4 per cent and the CAC 40 in France slipped 0.1 per cent.

Futures trade domestically is pointing to a weak start on the Australian share market – the ASX SPI 200 index was down 38 points to 4,448.

In commodity trade, the spot price of gold has jumped to around $US1,730 an ounce as those fears about the US debt impasse boost safe haven investments.

West Texas crude oil is clawing back some of yesterday’s steep losses, up to $US85.10 a barrel.

The Australian dollar is higher against the greenback – at 6:50am (AEDT), it was buying around 104.2 US cents, 81.8 euro cents, 82.8 Japanese yen, 65.3 British pence and just under $NZ1.28.

Topics: business-economics-and-finance, economic-trends, markets, currency, futures, stockmarket, united-states, united-kingdom, european-union, australia

Slide in Tas business confidence

Updated November 01, 2012 13:50:42

The Premier and Treasurer Lara Giddings admits Tasmania has a business confidence problem.

The Tasmanian Chamber of Commerce and Industry’s business expectations survey shows a fall in the index of 2.6 points to about 32.

Chief Economist Phil Bayley says up until the September quarter the index had remained stable

Mr Bayley says it is expected the December quarter will be worse.

He says Tasmania is in an “anaemic state” and it is being undermined by poor decision making at all levels of government.

Ms Giddings says other surveys have shown business confidence in the state is among the strongest in the country.

“What’s obvious here is that there is a mixed feeling across the community, we’re aware of that,” she said.

“We understand that confidence is an issue in Tasmania.

“That’s why I’m disappointed every-time I see the Opposition talking down this state.”

Topics: economic-trends, states-and-territories, small-business, tas, hobart-7000, launceston-7250

First posted November 01, 2012 13:47:29

Euribor rates steady after year-long slide

FRANKFURT: Key Euribor bank-to-bank lending rates steadied on Monday in a fresh sign they may be finding a floor after a year-long slide under the weight of excess liquidity in money markets.

Three-month Euribor rates, traditionally the main gauge of unsecured bank-to-bank lending, were unchanged at 0.204 percent. The six-month rate held steady at 0.405 percent.

The shorter term one-week rate edged up to 0.080 percent from 0.079 percent, while the overnight Eonia rate rose to 0.095 percent from 0.093 percent.

Bank-to-bank lending rates had been falling steadily since November last year when news broke that the ECB was going to flood the banking system with ultra-cheap, three-year cash.

The bank’s decision in July to stop paying interest on overnight deposits has allowed the fall to continue by removing the 0.25 percent floor for the money market.

Dollar-priced bank-to-bank Euribor lending rates  fell, with three-month rates at 0.58923 percent from 0.59000 percent and overnight rates at 0.30154 percent from 0.30231 percent.

The amount of excess cash in the euro zone banking system is extremely high at about 676 billion euros according to Reuters calculations.

With that figure set to remain high for the foreseeable future, money market experts have focused on whether the ECB could copy Denmark’s example and start charging banks to deposit cash overnight. Policymakers showed initial interest in the idea but some have since expressed reservations.

ECB Governing Council member Ewald Nowotny told an investment conference on Friday that current interest rates were appropriate and inflation concerns were not justified.

Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 0900 GMT.


ZTE shares slide on loss forecast

15 October 2012 Last updated at 04:45 GMT Composite of Huawei and ZTE's logos A US panel has voiced its concerns over the links of ZTE and Huawei to Chinese authorities Shares of Chinese telecom equipment maker ZTE have dipped after it forecast a loss of between 1.9-2bn yuan ($300m; £188m) for the third quarter.

That compares with a profit of $299m during the same period last year.

ZTE shares dipped as much as 17% to HK$10.42 on the Hong Kong Stock Exchange and 10% to 9.45 yuan on the Shenzen stock exchange.

Last week, a US panel said the firm was a security threat to the country.

It had raised concerns about the links of ZTE and another Chinese firm, Huawei, to the Chinese government, allegations that the firms have denied.

In its report, the US panel recommended that the two firms should be barred from any mergers and acquisitions in the US, and that US firms should try and avoid using equipment made by the two companies.

ZTE is also being investigated by the US authorities over its dealings with Iran amid allegations that it sold banned computer gear to Tehran.

US sanctions against Iran prohibit the trade of any non-humanitarian goods with Iran.

The firm said that its performance during the period was hurt after it curtailed its sales to Iran in wake on the sanctions.

US markets slide as profits disappoint

By finance reporter Justine ParkerPosted October 11, 2012 09:31:21

Stock markets in the United States and Europe have reversed for a second day, as the outlook for global growth dragged on trade.

Warnings of a slowdown by top US companies added to earlier downgrades by the World Bank and the International Monetary Fund.

In the United States, the Federal Reserve released its Beige Book overnight, saying the US economy grew “modestly” last month, driven by housing and car sales.

US companies said they were hesitant to take on new workers amid uncertainty about the upcoming presidential election, the budget stalemate and the eurozone’s debt woes.

The report offers anecdotal evidence on the state of the economy two weeks before a key Fed policy meeting.

Corporate earnings season began with a whimper; major companies including Alcoa and Chevron both gave a weak outlook.

The Dow Jones lost 1 per cent to close at 13,345, the S&P 500 fell 0.6 per cent to 1,433, and the Nasdaq Composite Index dropped 0.4 per cent to 3,052.

In Europe, the planned merger between the British defence giant, BAE Systems, and the maker of Airbus planes, EADS, is off.

The deal would have created the world’s biggest aviation and defence business, but the companies say the British, French and German governments could not reach agreement.

The FTSE 100 in London fell 0.6 per cent to 5,777.

The DAX in Germany fell 0.4 per cent and the CAC 40 in France lost 0.5 per cent.

Back home, the ASX SPI 200 futures index was down 25 points at 4,459, suggesting a weak start to the Australian session.

In commodity trade, spot gold has slipped to $US1,764 an ounce and West Texas crude oil was lower around $US91.20 a barrel.

On currency markets, the Australian dollar continues to recover the ground it lost earlier this week against most major currencies.

At 6:45am (AEDT) it was trading at 102.4 US cents, 79.4 euro cents, 80 Japanese yen, 63.9 British pence and more than $NZ1.25.

Topics: business-economics-and-finance, markets, currency, futures, stockmarket, united-states, united-kingdom, european-union, australia

Fairfax chief’s pay surges as profits, shares slide

By finance reporter Justine ParkerUpdated October 03, 2012 16:28:32

The Australian Shareholders Association has criticised a surge in pay for the head of Fairfax Media as the company slashes jobs and its share price hits record lows.

Fairfax’s annual report shows its chief executive Greg Hywood’s total pay came in at $2.36 million last financial year, despite the company announcing a $2.7 billion loss for the period.

Mr Hywood’s total remuneration rose from $1.53 million to $2.36 million, although part of the increase was due to last financial year being his first full year as chief executive.

The total package includes salary, unvested shares and bonuses.

Mr Hywood’s remuneration rose despite his decision to voluntarily forgo half his bonus for the year.

Shareholders Association chief executive Vas Kolesnikoff says Mr Hywood is in a tough position at the moment.

“At the same time he is paid quite handsomely so we would expect to see some level of recognition of pay for performance, and performance isn’t fantastic at the moment,” he said.

Mr Kolesnikoff says Mr Hywood and the Fairfax board may face tough questions from shareholders at its annual general meeting on October 24 in Melbourne.

“It’ll be interesting to see going forward how the board responds to Mrs Rinehart and Jack Cowin, certainly from performance,” he said.

“Everybody wants to see performance and we all need to be aware, other than Gina Rinehart losing money, the average Aussie’s also lost money on this as well.”

Shares in Fairfax Media touched record lows today of 39.5 cents.

Topics: business-economics-and-finance, company-news, corporate-governance, media, australia

First posted October 03, 2012 10:17:04

Markets slide on IMF downgrade

By finance reporter Justine ParkerUpdated October 10, 2012 09:21:54

It was all red on global stock markets overnight, after the International Monetary Fund cut its forecasts for global growth yesterday.

The IMF warned of increased risks that the world’s top economies could slide into recession next year if governments in Europe and the US do not take proactive steps to resolve their economic troubles.

In the United States, the third-quarter corporate earnings season kicks off later today. Investors expect companies to report lower earnings for the period.

The Dow Jones lost 0.8 per cent to 13,474, the S&P 500 fell 1 per cent to 1,441, and the Nasdaq Composite Index dropped 1.5 per cent, to close at 3,065.

In Europe, German Chancellor Angela Merkel made her first visit to Greece since the eurozone’s debt crisis began three years ago.

Riots filled the streets of Athens for Mrs Merkel’s six-hour visit.

She affirmed her commitment to keep Greece in the eurozone, but said there is still much to be done to put the country on a path to recovery.

The FTSE 100 in London fell 0.5 per cent to 5,810, while the DAX in Germany and the CAC 40 in France lost 0.8 and 0.7 per cent respectively.

In futures trade locally, the ASX SPI 200 index was down 34 points to 4,475, suggesting a weak start to the Australian session, after the market reached a 14-month high yesterday.

Commodity prices are mixed – spot gold has slipped to nearly $US1,765 an ounce, but West Texas crude oil has jumped more than 3 per cent, to $US92.40 a barrel, as tensions between Syria and Turkey escalate.

On currency markets, the Australian dollar has been edging higher against the greenback, and was trading around 102.1 US cents, 79.2 euro cents, 79.8 Japanese yen, 63.8 British pence and nearly $NZ1.25.

Topics: business-economics-and-finance, markets, currency, futures, stockmarket, australia

First posted October 10, 2012 09:13:59

Sustaining the slide: Inflation falls to 32-month low against the odds

CPI for August stands at 9.1%, beatin­g expect­ations of trend revers­al.  CPI for August stands at 9.1%, beating expectations of trend reversal. DESIGN: ASAD SALEEM

ISLAMABAD: Inflation dipped to 32-month low of 9.1% and remained in single-digits for the second consecutive month in August, beating expectations of an increase in trend due to abnormal increase in food prices in Ramazan and surge in petroleum prices.

The Pakistan Bureau of Statistics (PBS) released the official figures even before the end of the month. Usually, it announces the inflation data in the first week of the new month.

On back of the single-digit inflation of 9.6% in July and seeing the trend to continue, the State Bank of Pakistan has already cut its benchmark discount rates, reducing the borrowing costs for both the government and the private sector.

The inflation rate in the second month of the fiscal year is in line with the annual target of 9.5%. The Ministry of Finance has targeted the single-digit inflation for 2012-13 on back of considerable improvement in the supply of essential items during the last fiscal year.

Due to single-digit monthly inflation, the average inflation for the two months also remained in single-digits. According to the PBS, the average inflation between July and August was recorded at 9.32%.

While the general inflation is down, the non-food and non-energy inflation, known as core inflation still remains a concern. The core inflation, even a more significant measure to check inflationary trends, remained in the double-digits and was recorded at 10.8% in August over a year ago, said the PBS.

The PBS has attributed the consistent double-digit core inflation to hikes in the prices of clothing, footwear, health, transport, education and restaurants.

Similarly, the prices of individual products increased significantly. The price of tomatoes soared 78.6%, onions 46.3%, pulse gram 46.2%, besan (gram flour) 43%, gram whole 24%, fresh fruits 18% and cigarettes became expensive by 18.2%.

However, contrary to the official rates, the prices of vegetables and fruits almost doubled last month due to increase in demand in the holy month of Ramazan.

The text books prices soared 40.5%, household servants 28.7%, motor vehicles tax 27% and doctors’ clinic fees increased 25%.

Published in The Express Tribune, September 1st, 2012.