- Prime Media and Seven West struggle for shareholder approval for merger
- IOOF gets APRA approval to buy OnePath and Oasis Fund Management
- Iron ore prices rise on expectation of Chinese stimulus
The S&P/ASX 200 dropped down to 6714.6 points when it opened this morning, but is now slightly higher at 6719.5. There is 118 companies trading lower and 73 higher.
The utilities and materials sector are out-performing, while information technology and financials are the worst performers.
Within utilities all four companies are higher with Spark Infrastructure up 1.2 per cent to $2.09 and APA Group is up 0.7 per cent to $11.01 after it took control of the Orbost Gas Plant.
APA Group owns the gas plant, which has been under construction by Downer Limited. This means gas supplies from Cooper Energy’s Sole Gas Project can start flowing to the Eastern Gas Pipeline in February 2020.
IOOF has received the go-ahead from the Australian Prudential Regulation Authority (APRA) to acquire OnePath and Oasis Fund Management, thus completing its takeover of ANZ Wealth Pension and Investments business. The deal is expected to go through on 31 January next year. IOOF shares are 5.1 per cent higher at $8.21, the highest price for 14 months.
“APRA’s approval represents an important milestone and allows for the creation of an industry leading advice-led wealth management organisation,” IOOF chief executive Renato Mota told shareholders this morning.
“Our recent investment into uplifting governance and client focus provides a valuable foundation which will benefit all clients and members including those from the ANZ business.”
The sale of the super operations was delayed because OnePath needed to determine if the deal was in the best interests of members, following intense scrutiny and criticism of IOOF at the banking royal commission. The OnePath trustees and ANZ in late October told IOOF they did not object to the deal, allowing it to go ahead.
Australians remain pessimistic about the outlook for the domestic economy, albeit less so than in recent weeks. Sentiment towards the current economic conditions and those looking five years ahead rose 3.9 per cent and 2.7 per cent respectively last week, according to respondents in the latest ANZ Bank-Roy Morgan Research Australian consumer confidence survey.
Despite the steep improvement last week, sentiment towards both the near and long-term economic outlook remains depressed, sitting near multi-year lows. ANZ Bank head of Australian economics David Plank described the result as “encouraging” given it followed soft economic data released during the week, including news that Australian economic growth slowed in the September while retail sales in October were flat.
“It is possible that the RBA’s positive outlook supported sentiment,” Mr Plank said, referring to the bank’s decision to keep Australia’s cash rate steady in December.
“Continued gains in house prices may also be supporting sentiment.”
Mirroring the improved mood towards the economy, views regarding current family finances and whether now is a good time to buy a household item also brightened, lifting 1 per cent and 1.9 per cent respectively from a week earlier.
The only component to register a decline in the latest survey was expectations for finances in the year ahead which tumbled 3.7 per cent, leaving it below historic norms.
Speculation surrounding increased Chinese infrastructure saw iron ore prices surge to fresh multi-month highs on Monday.
“The Chinese politburo once again mentioned a boost to infrastructure spending as a way of supporting growth next year,” ANZ senior commodities strategist Daniel Hynes told clients.
“The meeting of Chinese leaders also failed to mention any constraints on housing, signalling a milder policy tone for the sector.”
The remarks coincided with big gains in Chinese iron ore futures on Monday, adding to the rally seen on Friday evening. According to data from the Shanghai Futures Exchange, iron ore futures for May delivery spiked 5.6 per cent to ¥653 per tonne. On several occasions futures hit “limit up” 6 per cent, meaning the only factor preventing further gains was that contract specifications prohibited them.
The strength in futures spilled over into physical markets with the spot price for benchmark 62 per cent iron ore fines surging 5.5 per cent to $US93.93 a tonne, according to Fastmarkets MB, leaving it at the highest level since October 8.
Iron ore fines with 58 and 65 per cent also jumped more than 4 per cent to start the week.
Linked to increased infrastructure spending, Chinese steel futures also jumped to multi-month on Monday, helping to boost steel mill profit margins despite increased input costs.
“Mills have seen a big improvement in margins that are now approaching peak-construction season levels,” analysts at Macquarie said in a note.
“The main driver is a faster than expected inventory drawdown, both in traders’ warehouses and steel mills.”
The combination of improved profit margins and low inventory levels incentivises steel mills to up production levels, helping to underpin demand for raw materials, including iron ore. Suggesting the rally in physical markets may extend further on Tuesday, Chinese futures rose by another ¥4 to ¥653 per tonne in overnight trade on Monday.
Property fund Centuria will tap investors for $185 million to underwrite the $256 million purchase of a Canberra office building leased to the federal government.
The $185 million fully-underwritten institutional placement will partially fund the purchase of the A-grade Nishi Building, a commercial office in New Acton, between Canberra’s Civic district and Lake Burley Griffin.
The $3 per unit issue price is at a 4.8 per cent discount to the Monday’s close price of $3.15 for the Centuria Metropolitan REIT, the fund in which the asset will sit. Centuria will also raise another $10 million towards the purchase in a non-underwritten unit purchase plan from eligible unit holders in Australia and New Zealand.
The office tower has 27,411 square metres of net leasing area and a weighted average lease expiry of 7.9 years and will increase the REIT’s office exposure in the Australian Capital Territory from 5 to 16 per cent.
IG MARKETS SPONSORED POST
ASX futures down 3 points to 6726 near 7.10am AEDT
- AUD -0.1% to 68.32 US cents
- On Wall St near 3.10pm: Dow -0.2% S&P 500 -0.2% Nasdaq -0.2%
- In New York: BHP +1.1% Rio +1% Atlassian -0.2%
- In Europe: Stoxx 50 -0.6% FTSE -0.1% CAC -0.6% DAX -0.5%
- Nikkei 225 futures -0.1%
- Spot gold flat at $US1460.50/oz at 12.50pm New York
- Brent crude -0.2% to $US64.25 a barrel
- US oil -0.2% to $US59.07 a barrel
- Iron ore +5.5% to $US93.93 a tonne
- Dalian iron ore +2.4% to 657 yuan
- LME aluminium -0.5% to $US1757 a tonne
- LME copper +1.4% to $US6075 a tonne
- 2-year yield: US 1.63% Australia 0.74%
- 5-year yield: US 1.66% Australia 0.76%
- 10-year yield: US 1.82% Australia 1.15% Germany -0.31%
- 10-year US/Australia yield gap about 4.45am AEDT: 67 basis points
IG MARKETS SPONSORED POST
It was a quiet and cautious start to the trading week in global markets. There’s an apparent reluctance to commit to any major moves amongst traders, ahead of a risk-laden week. Price action has pointed to something of a mixed-Monday, sentiment wise, with market participants primarily spending the day digesting conflicting growth signals out of the US and China.
The day was positive for the ASX200; however, yesterday’s gains are looking vulnerable today, judging by futures markets. Overall, markets may well be stuck in a tight holding pattern for a few days, as traders weigh the bull and bear cases from this week’s several event risks.
North American and European equities fell last night, and safe-haven assets generally climbed, in what was a tepid day’s trade in global markets. Activity was rather light, with traders generally spending the day digesting two pieces of largely conflicting news-stories concerning global growth.
Arguably, markets are primed and positioned for the most realistic bull-case from this week’s events. Of course, the best outcome of all would be some magical disappearance of Brexit and the trade-war; and, for some bizarre reason, a surprise easing monetary policy conditions. But that’s a utopian, fantasy land for investors.
However, given the parameters, traders seem to believe that the market’s risk is skewed to the upside. If things go to plan, then a modest “risk-on”, “Santa Clause Rally” might be in the offing for stock markets. The outlook for global growth going into 2020 ought to modestly improve too.
Prime Media Group this morning acknowledged reports that shareholders Bruce Gordon and Antony Catalano do not support the proposed takeover by Seven West Media, and says it will go back to the drawing board. Yesterday the two companies tried to sweeten the deal with an extra 3¢ special dividend.
However, the combined holdings of both men and their entities is 26.16 per cent of votes. This would be enough to block the scheme of arrangement, which requires 75 per cent of votes in favour.
“In accordance with its obligations under the Scheme Implementation Deed, Prime is consulting with Seven in relation to the Scheme having regard to the press reports referred to above,” Prime told shareholders this morning. There will be more meetings today to try and get the shareholder support they need.
Good Morning and welcome to today’s Markets Live blog.
Your editors today are Lucy Battersby and David Scutt.
This blog is not intended as financial advice.
Source: Thanks smh.com