Markets Live: Shares lose some steam

4.42pm: BlueScope Steel was today's star performer, soaring 35 per cent after it said it plans to sell half of its Asian and North American building products businesses to Nippon Steel Corp for $US540 million.

4.35pm: The dollar struggled to advance today as most regional sharemarkets posted losses and was recently buying $US1.0542.

It was also buying 85.86 euro cents, hovering close to its all-time high against the single currency. The euro has lost around 10 per cent since mid-May as it has become the currency of choice to fund carry trades.

"It has had a consistent downtrend.... The Aussie might be starting to feel expensive against a number of currencies," says Greg Gibbs, a strategist at Royal Bank of Scotland in Singapore.

4.15pm: Among the sectors, materials rose a robust 1.1 per cent, while financial fell 0.4 per cent. Gold jumped 2.7 per cent and indutrials added 0.8 per cent.

4.12pm: The market has closed slightly higher, losing most of its early gains during the session. The benchmark S&P/ASX200 index rose 6 points, or 0.1 per cent, to 4283.3, while the broader All Ords gained 6.7 points, or 0.2 per cent, to 4309.5.

4.01pm: Swiss private bank Julius Baer will acquire Bank of America Merrill Lynch's private bank outside the US for 1.47 billion Swiss francs ($1.45 billion), bumping up its assets by 40 per cent.

Baer, which is Switzerland's third-biggest listed private bank, said the deal would be accretive to earnings from the third full year following closing. Restructuring, integration and retention costs are expected to total around 400 million francs, the bank said.

The bank has made no secret of its intent to make acquisitions and this is Baer's biggest merger since it bought Ehinger Armand von Ernst, Ferrier Lullin & Cie, BDL Banco di Lugano and asset manager GAM from UBS in 2005.

3.55pm: Meanwhile, shares across the region are mostly lower, albeit not by much. Shanghai and Seoul are leading the losses, both down about 0.7 per cent.

"People are taking some profits, cutting risk after the run up last week," says Jackson Wong, Tanrich Securities' vice-president for equity sales.

Regional investors will be watching July US retail sales and consumer prices, along with the euro zone's second quarter gross domestic product reading on Tuesday, which is expected to contract. Fears were growing that the three-year euro zone debt crisis will push the German economy into recession in the second half of 2012.

3.37pm: It was a case of '‘steady as she goes’' on the Australian sharemarket to start the week, with the ASX200 index primarily operating in a 15 point range either side of the 4300 level much of the day, CMC Markets trader Tim Waterer says:

• The blue chip mining stocks quickly forgot about Friday’s negative Chinese data to trade higher today, mostly in light of the muted response to the Chinese economic indicators from global markets.
• All in all however it was very much run of the mill stuff on the local bourse as we await direction from markets in the US and Europe as the week progresses.
• With financial markets playing the waiting game for the expected September stimulus by th Fed and the ECB, a test of nerves could arrive if Spanish and Italian yields start boiling over again which could result in risk assets being the first to blink.

3.18pm: Meanwhile, the FT is reporting that some fund managers in Europe could be caught by unexpectedly strict pay curbs when the first EU attempt to regulate the hedge fund and private equity industry becomes a reality next year.

There is increasing industry alarm that draft guidance on how to implement the law could see restrictions such as bonus deferrals and clawbacks, which are already enforced in the banking sector, imposed on a wider range of big funds than first thought.

These measures, which if strictly enforced would overhaul the sector’s prevailing pay practices, are included in the Alternative Investment Fund Managers Directive (AIFMD), an EU law that must be enforced by July 2013.

3.15pm: After a 75-year run, the Smith Barney name has earned some time off, the WSJ notes.

Morgan Stanley, which owns 51 per cent of the brokerage firm Morgan Stanley Smith Barney, plans to formally drop the last part of the brokerage joint venture's name in about a month, according to a person involved with the planned change. The switch was previously disclosed, but the timing wasn't.

3.07pm: Roll-a-door maker Alesco is believed to be mulling another special dividend to investors as part of a deal to recommend the $200 million hostile takeover from paint and adhesives giant Dulux Group, Ian McIlwraith writes.

Both companies this morning called a halt to trading in their shares until Wednesday while they try to hammer out a deal from talks that began last week when Dulux's stake in Alesco rose above 42 per cent.

For the first time since early May, when Dulux revealed that it had bought just under 20 per cent of Alesco and was bidding for the rest, the opposed groups are in talks on a compromise.

Because Dulux has already declared its increased $2.05 a share offer "last and final", it cannot actually raise that figure - but there is nothing to stop Alesco from declaring another special dividend for investors.

2.55pm: As the graph above shows, stocks are trading near their lowest point for the session. The ASX200 is now up 12.9 points, or 0.3 per cent, to 4290.2. The dollar is steady at $US1.0563.

2.43pm: Gold has climbed for a third day on speculation that central banks including the US Fed may take more action to stimulate their economies and as exchange-traded product holdings expanded to a record.

Immediate-delivery gold has gained as much as 0.3 per cent to $US1625.

“The market’s just waiting and waiting for the Fed to do something,” David Lennox, an analyst at Fat Prophets has told Bloomberg.

Quantitative easing “will always be on the drawing board until we see a really concerted improvement in the US economy,” he says.

2.36pm: CommSec’s Craig James says consumers can expect the average pump price for petrol to continue to edge higher.

‘‘The trick for motorists, as always, will be to time purchases. Across most capital cities the discounting petrol cycle seems to have hit its lows over the weekend and prices should track higher over the next few days,’’ he says.

‘‘Overall petrol prices look set to track higher and the Aussie dollar isn’t providing much in the way of resistance. Petrol is the single biggest purchase for most families and higher petrol prices also serve to constrain consumer sentiment. In short higher petrol prices will make conditions tougher for retailers.’’

2.26pm: The Queensland premier has gone to war with Clive Palmer, saying the billionaire has tried to use his mates in the Liberal National Party to win political favours.

Campbell Newman has accused Mr Palmer, an LNP supporter and wannabe federal candidate, of trying to ‘‘bully’’ his government over a development proposal and other issues.

He says Mr Palmer ‘‘has sought to inappropriately use LNP party people to put pressure on the government over a range of things’’ and cited a tourism development on the Sunshine Coast.But Mr Newman vows there will be no special treatment for the man whose companies donated $660,000 to the LNP in the 2010/11 financial year.

‘‘He thinks he can use the LNP hierarchy to bully the government and it’s not going to happen,’’ the premier says. ‘‘If he doesn’t like that, then frankly it’s up to him if he remains a member of the LNP.’’

2.17pm: Here's a snapshot of how other markets in the region are performing this afternoon:

• Tokyo’s Nikkei is up .02%
• Hong Kong’s Hang Seng is down 0.18%
• Shanghai stocks are down 0.76%
• South Korean stocks are down 0.46%
• New Zealand stocks are up 0.43%

2.10pm: World oil prices are higher on expectations of stimulus measures to boost economic growth in the United States, China and Europe, analysts say.

A collision between a US guided-missile destroyer and a Japanese-owned oil tanker near the Strait of Hormuz also rattled nerves among investors concerned over potential supply disruptions on the strategic waterway.

New York's main contract, light sweet crude for delivery in September, is up 47 cents to $US93.34, while Brent North Sea crude for September has climbed 69 cents to $US113.64.

1.39pm: Regarding the market's afternoon drop in confidence, IG Markets dealer Chris Weston says the macro situation is still very hit and miss, with market watchers expecting pressure on Spanish yields this week which could put downward pressure on European equities.

‘‘These markets, globally are being supported on stimulus expectations which could dissipate,’’ he says.

He also doubts the US Federal Reserve will release a full blown quantitative easing package in September.

Weston says there was some interesting price action in early morning local trade, with Newcrest, Bluescope, Downer EDI and JB Hi-Fi releasing better than expected earnings results, while UGL and James Hardie were both under pressure.

‘‘Companies that have been heavily beaten up earlier this year are coming out with a slightly more positive investment thesis and people are changing tack slightly."

1.27pm: The market's gains are fading, witht he ASX200 up only 0.3 per cent, about half of it's intraday peak. The financial sector is leading the way down, off 0.1 per cent, as two big banks - ANZ and CBA - drop into the red, albeit just minimally.

1.21pm: For the first time since early May, when Dulux revealed that it had bought just under 20 per cent of Alesco and was bidding for the rest, the opposed groups are in talks on a compromise, Ian McIlwraith writes:

Because Dulux has already declared its increased $2.05 a share offer "last and final", it cannot actually raise that figure - but it could probably decide not to deduct from its offer price the 15 cents in dividends declared by Alesco.

The change in attitude from Alesco, which had stonewalled Dulux on negotiating, is believed to have happened in the middle of last week when Dulux revealed that it was now entitled to more than 42 per cent of Alesco.

While that is not quite control of Alesco in an accounting sense, which requires 50.1 per cent, business whizzes like Rupert Murdoch, Kerry Stokes and James Packer have proved that you can direct the future and structure of a company with far fewer shares - usually anything more than 30 per cent of the votes.

1.10pm: BlueScope Steel's deal with Nippon Steel is the first positive piece of news for the company in a long time and could herald a turning point, Adele Ferguson writes:

Besides giving it a big partner with a lot of muscle in Asia, Nippon Steel has given it access to new customers in the $40 billion market as well as some much needed capital to invest in its growth.

This could include either buying out the remaining 50 per cent of a small, but profitable, US mini steel mill, or expanding its pre-engineered steel frame business, which makes frames for warehouses and the big Costgo supermarket building in Melbourne’s Docklands. Both these businesses are doing well and have been dwarfed by the negative parts of the business.

The news will be a welcome relief to shareholders and staff who have watched the company’s share price fall from a high of $8 three years ago to a close on Friday of 26 cents. Not surprisingly, most were feeling battered and bruised.

1.04pm: This one from our Small Business team is the latest in our Enterprise Secrets series: Brothers business booms amid a hairy economy

It's no surprise that brothers Tony and Joseph Lattouf look like they've just stepped out of a salon. With almost 150 franchises around Australia, the founders of Hairhouse Warehouse can barely visit a shopping centre these days without stumbling upon one of their own.

12.45pm: Qantas will step up efforts to repel the advances of Virgin Australia and Tiger Airways following its decision to recommence services to the Gold Coast after a five-year absence.

The airline’s chief executive, Alan Joyce, will join the Queensland Premier, Campbell Newman, at Gold Coast Airport this afternoon for a cermony to launch the new services. It is understood to include three flights a day between Sydney and the Gold Coast using single-aisle Boeing 737-800 aircraft.

Qantas pulled out of the Gold Coast about five years ago, leaving its budget offshoot, Jetstar, to service the large leisure destination.

But pressure has been building on Qantas to recommence services, which has become more necessary as Virgin ramps up efforts across Australia to snare a bigger share of lucrative corporate travellers.

12.37pm: BlueScope Steel managing director Paul O’Malley will forgo any salary increase, bonus or long term incentives for the just ended fiscal 2012.

O’Malley made the announcement during a media briefing about the company’s$1.36 billion joint venture with Japan’s Nippon Steel corporation, which will give it entree to the whitegoods manufacturing market across south east asia.

He said he didn’t want the company’s performance to be ‘‘obscured’’ by comment about his remuneration.

12.19pm: Meanwhile, the dollar is trading fairly flat, buying $US1.0561.

‘‘There were a couple of key events last week which moved the markets, but it’s a quiet one this week,’’ CMC foreign exchange dealer Tim Waterer says.

‘‘I think the markets are just biding their time until the next key events for the ECB (European Central Bank) or FOMC (the Federal Reserve’s policy making arm the Federal Open market Committee) come around.’’

Waterer says investors are hoping for some stimulus from either of the two central banks, but will have to wait until September before this could happen.

‘‘We could be trading sideways up until those decisions next month.’’

12.15pm: Facebook has appointed a head of business development for Australia, underscoring the social media giant's desire to increase revenues in the maturing local market.

Sales director Liam Walsh has been appointed director of commercial development and sales for Facebook Australia, the company confirmed today.

Walsh will assume his new duties while continuing to run Facebook’s Australian business on a day-to-day basis, the company said.

Facebook currently has 11.5 million active users in Australia, up 15 per cent from the 10 million registered users around March 2011, the company said.

12.10pm: BlueScope shares are still up 37 per cent, making it the biggest gainer among the top 200. Earlier, its shares were up as much as 55 per cent.

In terms of what's driving the ASX200, heavyweights BHP and Newcrest are the biggest movers, adding 3.7 points and 3.1 points respectively to the index's rise.

11.58am: Shares in takeover target Alesco have been placed in a trading halt as it continues talks with DuluxGroup about its $210 million bid.

Alesco’s shares will remain in a trading halt until Wednesday, when the garage door and construction products maker expects to update the market about the takeover talks, which have been continuing for two months.

Alesco’s board previously has said it was opposed to paint maker Dulux’s offer, which includes 2.05 cents a share in cash plus 18 cents in franking credits. However, Dulux has managed to convince some of Alesco’s largest shareholders to take up its offer and now controls about 41 per cent of Alesco’s shares.

Alesco’s shares last traded at $1.915.

11.55am: The ASX200 is having a pretty good day, outperforming most other regional sharemarkets:

• Tokyo (Nikkei): flat
• Hong Kong: -0.2%
• Shanghai: -0.5%
• Taiwan: -0.1%
• Korea: -0.5%
• Singapore: -0.2%
• New Zealand: +0.4%

11.49am: Personal finance numbers are out:

• Personal finance loans rose 1.9 per cent in June, increased to $7.517 billion from $7.376 billion in May.
• Total commercial loans in June rose 2.3 per cent to $31.660 billion, seasonally-adjusted, from $30.961 billion in May.
• Lease finance was down 2.9 per cent to $549 million, compared with $565 million the previous month.
• Housing finance for owner occupation rose 1.2 per cent to $13.818 billion, from $13.657 billion the month before.

11.41am: One of the biggest losers of the morning has been James Hardie, which dropped as much as 6 per cent despite beating profit forecasts, as investors focused on the company's murky US outlook.

"They said the rate of improvement in the US is uncertain and I suspect that people were hoping the outlook would be more positive," says Beulah Capital portfolio manager Tom Elliott.

"They're also saying that the market environment in Australia is deteriorating, so when you look at it there's not too much to get excited about."

11.31am: Property developer GPT Group has cut 70 staff from its workforce in order to reduce costs.

GPT posted a net profit of $275.5 million for the first half of the calendar 2012 year, a 13 per cent increase on $243.1 million in the previous corresponding period.

A recent review of the company’s cost base had resulted in 70 people leaving GPT, while 10 new roles had been created, chief executive Michael Cameron said. The changes are expected to increase GPT’s operating income by $2 million in calendar 2012 and a further $10 million in 2013.

GPT shares are up 3.55 per cent.

11.24am: iiNet’s Canberra subsidiary TransACT, which used to be owned by Canberra’s utility company, has won an $8.6 million 10-year contract from the Department of Finance.

TransACT will store Finance’s data and iiNet recently spent an unknown amount upgrading its data storage facilities.

iiNet shares are up 1.4 per cent.

11.11am: Another comment here from Ric Spooner of CMC Markets, who said the Australian market was continuing to rally after recent announcements at the European Leaders Summit and by the European Central Bank that had reduced the potential of a near term crisis in Europe.

‘‘The S&P/ASX 200 index has now rallied by more than seven per cent from its low in June,’’ he said.

‘‘The key drivers of this rally have been portfolio repositioning after the announcement of European initiatives as well as ongoing demand for high yielding stocks with reliable earnings streams.’’

11.04am: The retailers are well ahead of the broader market, too. There could some positivity emerging after JB Hi Fi today posted a net profit drop of 5 per cent but predicted sales would grow this financial year.

• Woolworths: +1.21%
• Wesfarmers: +1.35%
• Harvey Norman: +1.55%
• DJs: +0.2%
• Westfield: -2.52%
• Myer: +1.39%

10.59am: Looking now at the big miners, which have enjoyed a strong start to the day;

• BHP is 1.07% higher to $33.04
• Rio is 0.41% higher to $56.68
• Fortescue is 1.46% higher to $4.52
• Newcrest is 2.3% to $24.90

10.55am: Investors don't seem to like the news that Westfield has confirmed it is in talks with financial services group AMP about a possible split of the multi-billion dollar shopping centres they own and manage.

Media reports at the weekend suggested Westfield and AMP had agreed to divide up their shopping centre portfolio, with at least six centres to be swapped between them. More here.

Westfield Group shares are down 2.5 per cent after being down close to 3 per cent a little earlier.

10.49am: Following that news about Japan's growth slowing, here's an item from Michael Pascoe on China's growth. He argues that, despite the headlines, it remains robust. He writes:

Last week's clutch of key statistics disappointed forecasters who were hoping for faster growth from China, but on any reasonable measure the world's second-biggest economy is still growing at a quite amazing speed.

It's tempting to say China's latest numbers were a bit like Telstra's profit – a nice big number, just not as big as the analysts were predicting – but they were actually better than that. Full story.

10.45am: Japan's economic expansion slowed more than expected in the second quarter, as a rebound in consumer spending starts to lose momentum and Europe's debt crisis weighs on global demand.

The world's third-largest economy grew 0.3 per cent in the April-June period, less than the median forecast of 0.6 per cent growth and slowing sharply from a revised 1.3 per cent expansion in the previous quarter, the Cabinet Office said today.

The data highlights the Bank of Japan's growing concern that slowing exports will weigh on economic growth in the second half of this year, wh ich could set the stage for additional monetary easing in coming months.

10.39am: Stocks have just eased off their early peak. Both the ASX200 and the All Ords are back to a gain of about 0.6 per cent. Here are the early sliders on the ASX200:

• UGL: -8.16%
• James Hardie: -5.8%
• Navitas: -3.86%
• Bradken: -3.17%
• Westfield Group: -3.02%
• Tabcorp: -1.55%

10.35am: Apart from BlueScope, here are the best-performed companies on the ASX200 so far today:

• Downer EDI: +8.97%
• Saracen Mining: +5.56%
• Arrium: +5.52%
• JB Hi Fi: +4.45%
• Leighton: +3.86%
• Sims Metal Management: +3.38%

10.31am: BlueScope shares are now 52 per cent higher. Here's why. They're now trading at 38 cents after closing on Friday at 26 cents.

10.26am: Shares in engineering firm UGL are sharply lower full year profit has dropped by 15 per cent while the company forecasts a steady financial performance in the year ahead.

10.20am: Markets are now 0.7 per cent higher. Stronger start than futures were pointing to, and well ahead of the gains posted by Wall Street to end last week.

10.17am: Shares in Newcrest Mining are 2.7 per cent higher, or 66 cents, to $24.99, after the gold miner achieved a record profit for the second year in a row. Full story.

10.15am: Shares in JB Hi-Fi have also risen this morning. They're up about 3.7 per cent, or 34 cents, to $9.56, after posting a net profit drop of 5 per cent of $104.6 million for the financial year just ended, slightly more than analysts' forecasts.

10.12am: The Australian sharemarket has opened more than three-quarters of one per cent higher. The benchmark S&P/ASX200 index is up 37.4 points, or 0.87 per cent, at 4314.7, while the broader All Ordinaries index is up 36.4 points, or 0.85 per cent, at 4339.2.

On the ASX 24, the September share price index futures contract was up 22 points at 4,277, with 5,842 contracts traded.

10.10am: BlueScope shares now 44 per cent higher. Fair to say, that's a good start to the morning. And about 26 million shares have changed hands so far this morning - that's about the daily average over the last year.

10.06am: Early take - stocks up 0.4 per cent as markets open.

10.03am: BlueScope shares are sharply higher early on news it has sold part of one of its steel coating plants. Its stock has risen 8 cents, or 31 per cent, to 34 cents in early trade.

9.55am: Here’s Ric Spooner of CMC Markets on where stocks are headed today:

The S&P/ASX 200 index has now rallied by more than 7% from its low in June. The key drivers of this rally have been portfolio repositioning after the announcement of European initiatives as well as ongoing demand for high yielding stocks with reliable earnings streams.

In technical terms the S&P/ASX 200 index is in a clear uptrend. The next hurdle for this trend would be to exceed last week’s high at 4330 and beyond that resistance at around 4350. On the other hand, there is significant support for the index at around 4215 and at this stage a break below that level would be needed to suggest any major downtrend was developing.

9.51am: A couple of pieces of news on BlueScope, both from the same statement this morning.

BlueScope, Australia's biggest steel maker, said it expects to post a full-year net loss after tax of about $1 billion when it reports later this month, including restructuring charges.

BlueScope also said it and Nippon Steel Corp have agreed to form a new joint venture with an enterprise value of $US1.36 billion ($1.29 billion) to make coated steel products.

More here.

9.47am: Gold major Newcrest Mining has achieved a record profit for the second year in a row, after this morning reporting a $1.11 billion profit for the year to June 30.

The company, which is Australia’s biggest listed goldminer, owes much of its success to the high gold price, with revenues rising by 8 per cent despite the volume of its sales falling by 6 per cent.

Full story.

9.45am: CMC chief market strategist Michael McCarthy said JB Hi-Fi stock will likely rise today after profits met earlier guidance.

“This is the most heavily shorted stock on the ASX. So profits coming in-line with guidance will result in a move up in the stock’s value as some of those disappointed shorts, possibly looking for a disaster, will come ease back on their positioning,” he said.

However, the JB Hi-Fi’s challenges remain.

Mr McCarthy questioned how the electronics retailer could acknowledge that the market it competes in is “fragmented and competitive” but that the relentless discounting seen among electronics retailers in 2012 is not part of a broader change.

In the results, JB Hi-Fi said it “anticipates” that discounting is “likely to continue in the short term but does not believe that this is a long term structural change.”

“It doesn’t make sense to me at all. The big issue here is that electrical goods have been commodified. They can be sold from anywhere and bought online – that is the big structural issue they’re facing,” he said.

9.42am: Electronics retailer JB Hi-Fi’s full year profit has fallen 5 per cent but the company expects sales to grow in the year ahead. JB Hi-Fi posted a net profit of $104.6 million for the year to June 30, down from $109.7 million in the previous corresponding period. Sales in the year of $3.13 billion were up seven per cent on the previous year, due to store growth.

9.39am: UGL’s full year profit has dropped by 15 per cent while the company forecasts a steady financial performance in the year ahead. UGL today posted a net profit of $134.3 million in the year to June 30, down from $158.5 million in the previous corresponding period.

9.37am: We'll get straight into the earning news from this morning. Engineering firm Downer EDI has returned to full-year profitability and expects growth in the year ahead. Downer today posted a net profit of $112.8 million for the year to June 30, up from a loss of $27.8 million in the previous corresponding period.

9.35am: Earnings season continues this week with a number of high-profile companies scheduled to report, including NAB, Westpac, Commonwealth Bank, Westfield, Wesfarmers and AMP. We'll get to today's reports in a moment. For a full list of the companies expected to report, click here.

9.32am: Local stocks are set for an early gain if leads on a positive lead from Wall Street. For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:

• Dollar hovers at $US1.055
  
• China takes shine off ASX
  
• Wall Street extends gains on stimulus hopes
  
• European stocks dip after two-week rally
  
• Oil slips on weak demand
  
• Gold posts weekly gain
  
• Australian Business calender August 13-18
  
• Wall St week ahead: Investors remain cautious

9.30am: Good morning folks. Welcome to the Markets Live blog for Monday.

This blog is not intended as investment advice

BusinessDay with agencies