IOOF jumps 4.8pc after wealth services approval

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.”

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.

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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

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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.