10:20am: One of the country's savviest investors, Geoff Wilson, is in no doubt that we are finally in a bull equities market.
"A new bull market has commenced in Australia with the local index trading at the highest level in 4.5 years," shareholders of one of his listed investment companies, WAM Research, were told when it released December half earnings this morning to the market.
"The market has risen over 24 per cent since June. Interest rates near 50 year lows in Australia are stimulating the economy. The stock market is a leading indicator of economic activity. It is currently forecasting a pickup in company earnings in late 2013."
10:17am: Patties Food has reported a net profit of $9.1 million for the six months to December, a fall of 16.5 per cent from the previous corresponding period.
The frozen foods supplier, which makes Four' N Twenty pies and produces the Nanna's and Herbert Adams brands, declared a fully franked dividend of 3.2 cents per share.
"This half year result reflects the challenging trading conditions, particularly in the In Home channel," Patties Food chairman Chris Riordan said.
"Our response must continue to be a relentless focus on supporting and enhancing our brands, developing new channels and regions and improving our manufacturing and supply chain efficiencies as part of an overall ongoing review of our cost structure."
The company reported an underlying net profit of $9.5 million, down 12.7 per cent from the same period the year before, on the back of a a one-off bad debt expense resulting from the administration of Australian Convenience Foods.
10:13am: The Australian share market has opened a third of a per cent higher.
At 10.10am AEDT on Monday, the benchmark S&P/ASX200 index is 16.9 points, or 0.34 per cent, at 5035.0, while the broader All Ordinaries index is up 16.2 points, or 0.32 per cent, at 5052.9.
On the ASX 24, the March share price index futures contract was up 22 points at 5,015, with 8,624 contracts traded.
10:12am: The HSBC flash manufacturing PMI for China for February is due out at 12.45pm. A Bloomberg survey expects the result to come in at 52.2, a slight weakening from last month when it landed at 52.3.
10:08am: Qantas non-executive director Corinne Namblard has resigned from the airline's board after being caught up in an investigation into a corruption scandal in Italy.
Qantas chairman Leigh Clifford said Ms Namblard resigned "in the best interests of both Qantas and herself".
"Ms Namblard was especially concerned to ensure that the continuing media focus on the current Italian proceedings did not distract Qantas from implementing its strategic imperatives nor detract from the achievements that Qantas has had in meeting the challenges to its business. The Qantas Board appreciates those sentiments," Mr Clifford said in a statement to the ASX this morning.
10:05am: Here's something that ought to trigger a bit of debate in the comments section. As Nicole Linday reports:
Home buyers turned out in force over the weekend delivering a strong pass mark to the first test of the pre-Easter season. Agents and buyer advocates cited low interest rates and pent-up demand as some of the elements drawing buyers back into the market after two years of lacklustre results and falling prices.
Melbourne's clearance rate of 73 per cent was achieved against a bumper crop of 903 auctions. The Real Estate Institute of Victoria said 541 properties were sold on the day, while 116 were sold before auction. Sydney’s rate was 76.2 per cent, Australian Property Monitors reported.
9:53am: As the week progresses, we're likely to hear more about Washington and the spending cuts which kick in on Friday if the pollies there can't agree on what form they should take.
As reported here, talks on the US budget crisis began again last week leading up to the March 1 deadline for the so-called sequestration when $US85 billion in automatic federal spending cuts are scheduled to take effect.
"It's at this point a political hot button in Washington but a very low level investor concern," said Fred Dickson, chief market strategist at DA Davidson & Co in Lake Oswego, Oregon.
The fight pits President Barack Obama and fellow Democrats against congressional Republicans.
Also in the US this week, the latest data on fourth-quarter US gross domestic product is expected on Thursday, and some analysts predict an upward revision following trade data that showed America's deficit shrank in December to its narrowest in nearly three years.
US GDP unexpectedly contracted in the fourth quarter, according to an earlier government estimate, but analysts said there was no reason for panic, given that consumer spending and business investment picked up.
9:48am: Patersons Securities strategist Tony Farnham said the Australian share market is expected to start the week on a positive note on the back of what happened on US and European markets on Friday.
The earnings season would still be watched closely by the market this week, especially the results of companies such as Harvey Norman, he said.
"People will be trying to get a measure of whether the interest-rate sensitive parts of our economy are getting a kicker from all those RBA rate cuts that have occurred since November 2011," Mr Farnham said.
A key economic indicator for the Reserve Bank ahead of its March board meeting next week would be the capital expenditure numbers released on Thursday - in particular, the expectation numbers for the rest of this year and for fiscal year 2014.
"Why it is important is because if it is quite disappointing, you would have to think that it shortens the odds of the RBA cutting again in March," Mr Farnham said.
International issues are also set to weigh on the minds of investors this week. Italians are voting for the second day in an election that could affect the stability of the eurozone, while US Federal Reserve Chairman Ben Bernanke is set to testify on monetary policy on Tuesday US time.
Also key is the sequester dateline on Friday, Mr Farnham said, which will see a raft of automatic spending cuts kick in if US politicians fail to reach a compromise on deficit reduction and tax increases.
9:45am: The Aussie dollar is holding steady against the US dollar, but is near record highs against the yen and the pound. Against the yen, the local unit was trading at 97.19, just short of the 97.34 it hit in early February, a four and a half year high.
And against the British pound:
9:41am: Looking ahead to the rest of the week, here's a snapshot of what we have in store. For a full calendar of the week's business and finance events, click here:
- Monday: No major economics news. Caltex, Patties and IOOF results.
- Tuesday: Transfield, QBE, Whitehaven, Flight Centre and Virgin results. RBA assistant governor Guy Debelle addresses University of Adelaide.
- Wednesday: Slater & Gordon, AGL, James Hardie, Westfield and Wotif results. ABS construction work done for Dec quarter.
- Thursday: ABS private new capital expenditure for December quarter. Challenger, Harvey Norman, Treasury Wine Estates and Woolworths results.
- Friday: The Ai Group performance of manufacturing (PMI) index for February, HIA trades report for the December Quarter, RBA index of commodity prices for February
9:37am: Kicking off the week with earnings, Caltex Australia has returned to the black, posting a net profit of $57 million for 2012, a reversal from the loss of $714 million posted in 2011 – even after making a large provision for the closure of its Kurnell refinery.
Revenue rose to $23.3 billion from $22.1 billion. In 2012, Caltex booked a $309 million provision for the closure of Kurnell, while in 2011 it took a $1.1 billion write-down in the value of this asset.
Despite the profit, Caltex has cut the final dividend to 23 cents from 28 cents a share, taking the annual payout to 40 cents down from 45 cents, after deciding to cut to 20 per cent from 40 per cent the dividend payout ratio following the decision to close Kurnell.
9:34am: For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key markets numbers:
- SPI futures are 21 points higher at 5014
- The $A is steady at $US1.0304
- US stocks climb on Fed, HP result
- European stocks rebound on strong German data
- China iron ore lost $US2.60 to $US153.60 a metric tonne
- Australian Finance calendar: February 25-March 1
- Wall Street week ahead: Washington deadline looms
9:33am: Good morning folks. Welcome to the Markets Live blog for Monday.
Contributors: Thomas Hunter, Jens Meyer, Max Mason
This blog is not intended as investment advice
BusinessDay with agencies
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