That's all for today, in what's been a remarkably quiet session - thanks for reading and commenting.
We'll be back for more action tomorrow from 9am.
Have a good evening.
![market close](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/2/g/h/4/2/image.imgtype.columnistThumbnail.60x60.png/1427260967167.jpg)
After a strong start, local shares trimmed early gains to finish mostly flat, though utilities stocks did their best to keep momentum in the green.
Utilities did most of the heavy lifting, buoyed by AGL which surprised investors with a $600 million buyback and flagged a rise in underlying profit.
The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each closed 0.05 per cent higher to 5412.4 points and 5500.2 points respectively.
AGL shares have lagged in recent months, though they soared 5.8 per cent after the buyback announcement and closed at $18.70.
"We are a little surprised by the timing of the buyback announcement given commentary at the FY16 result," said Paul Johnston, analyst at the Royal Bank of Canada. "And suspect that this is, at least in part, due to the recent meaningful weakness in the shares.
A sliding oil price weighed on energy stocks which dragged the bourse down.
Oil fell below $US45 a barrel as investors scaled back expectations of a deal on output cuts ahead of an informal OPEC meeting overnight. Australia's largest oil producer Woodside Petroleum closed down 0.7 per cent, Santos was down 3.1 per cent and Origin Energy 3.7 per cent.
Three of the big four banks traded higher throughout the afternoon, which Commonwealth Bank of Australia closing up 0.3 per cent higher, ANZ closed 0.7 per cent higher and National Australia managing to close up 0.1 per cent. Westpac, however, saw a slight selloff and closed down 0.1 per cent.
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Telstra customers who signed up to a mobile plan expecting international roaming with "unlimited standard calls, SMS and data" have not received what they expected, after an online publishing error was found to have incorrectly advertised overseas roaming benefits.
The advertisement for the Telstra iPhone 7 L Plan was displayed on the network's website, with the international roaming terms outlined in the plan's "Inclusions and bonuses".
The offering stated that customers need not "activate an international SIM whilst travelling overseas, as your plan includes Unlimited standard Calls/SMS and 1.5GB Data Allowance in eligible countries".
However upon inquiry, customers were informed that the international bonus applied only to calls and texts made from Australia to selected countries, and not while overseas.
![Telstra L Plan inclusions as advertised.](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/g/r/q/f/4/u/image.related.articleLeadwide.620x349.grqj45.png/1475043417851.jpg)
![money](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/2/a/v/i/v/image.imgtype.columnistThumbnail.60x60.png/1427151294073.jpg)
Selfies are now a major source of credit to Australian property investors, taking over from banks which are subject to restrictions governing lending to real estate investors.
New research from Credit Suisse equity strategist Hasan Tevfik finds that the $622 billion self-managed super fund sector is a significant lender to property through senior debt, mezzanine debt and preferred equity.
Returns of 15 per cent to 20 per cent were recorded by mezzanine debt providers versus 2 per cent available for returns on cash.
"Over the last few months, we have had numerous discussions with people in the business of channelling money towards resi-developers from investors like SMSFs," the strategist said in a report, citing lawyers, accountants and specialist intermediaries who create unlisted trusts.
"Selfies are now part of the shadow-banking system."
Tevfik says this is not a cause for alarm. "Unlike the infamous shadow-banks of the US sub-prime crisis, selfies carry very little financial leverage." (He notes however, it is unclear how a default would be resolved.)
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Nickel futures are holding near seven-week highs after the Philippines said 20 more mines may be suspended for environmental violations, threatening supply from the world's top nickel ore exporter.
Manila has already halted 10 mines in an audit over the past two months aimed at punishing irresponsible miners as the government vowed to pursue stricter standards than in global mining centres such as Canada and Australia.
Suspending another 20 would leave only 11 operating mines in the Southeast Asian country which accounts for nearly a quarter of the world's mined nickel supply - most of which is shipped to China.
"There's a large risk of all these 20 being out for much longer than expected," said Daniel Hynes, senior commodity strategist at ANZ, who sees nickel at $US11,500 per tonne by year-end.
"The rhetoric coming out of the government seemed quite strong and intense, so I suspect (these mines) are going to have to jump through a lot of hoops to get these operations back up and running and that could drag on for sometime."
Three-month nickel on the London Metal Exchange opened 0.3 per cent higher, before slipping to be down slightly at $US10,600 a tonne. The metal used to make stainless steel peaked at $US10,900 on Tuesday.
Nickel's failure to build on gains suggests that the "market's still a bit dubious as to the impact of these potential closures" in the Philippines, said ANZ's Hynes.
The impact to global nickel supply may also be limited at this time given the monsoon season which affects mining operations and shipments there, he said.
But Citi analysts said the flow of nickel ore could "materially tighten" during the rest of the year and into 2017, depending on the final results of the audit due next month.
Citi said the "unexpectedly stringent" audit upped the chances of a bullish scenario for nickel, predicting the price would average $US11,000 in the final quarter of this year and $US11,700 next year.
Local nickel miners have given back some of yesterday's strong gains, with Western Areas down 4.1 per cent at $3.03, after surging nearly 11 per cent yesterday.
![Nickel prices have failed to extend yesterday's rally, weighing on local shares.](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/g/i/r/o/i/i/image.related.articleLeadwide.620x349.grqdgs.png/1475037582936.jpg)
![The yield on the Australian 10-year](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/1/m/8/w/x/g/image.imgtype.columnistThumbnail.60x60.png/1475200777471.jpg)
Goldman Sachs says inflation pressures are slowly starting to build in the US, increasing the chances of a rate hike in December.
"All of the signals are suggesting that we are now pretty close to full employment (in the US), and we're starting to exert some upward pressure on inflation," said Jan Hatzius, chief economist at Goldman Sachs. "I do think the Fed is going to respond to that. Gradually, but I think they will respond."
Hatzius estimates there's a 65 per cent chance the Fed will raise interest rates in December, while fed fund futures put the probability at 50 per cent.
However, Nikko Asset Management chief global strategist Roger Bridges doesn't think the world probably is about to enter an inflationary period.
"I don't think it's suggesting that we're going to see inflation," he said. "It just means that the fear of deflation is lessening."
![eco news](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/2/b/d/k/f/image.imgtype.columnistThumbnail.60x60.png/1426030549910.jpg)
Switzerland has been named the most competitive nation for an eighth straight year, amid warnings that less open trade is threatening economic growth globally.
Switzerland was ahead of Singapore and the US in the World Economic Forum's annual rankings of 138 countries, with Netherlands overtaking Germany to take the fourth spot and Australia coming in a lowly 22nd.
The Geneva-based organisation used the report to highlight its concern about a gradual decline in openness. It blamed this on rising non-tariff barriers and more burdensome rules governing foreign investment and customs, and said it's threatening to hurt the world economy.
"Declining openness in the global economy is harming competitiveness and making it harder for leaders to drive sustainable, inclusive growth," said Klaus Schwab, founder of the forum.
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What's the biggest risk facing the market? The policy decisions of central banks continue to capture the attention of the markets, but fund managers have plenty of other concerns to factor into their portfolio positioning.
For Prime Value Asset Management joint-chief investment officer ST Wong, Europe is the biggest concern.
The spillover from the stress in its banking system and an escalation of political risks could derail its economic recovery, he said. "Europe appears to be dealing with long-term structural issues from unresolved debt and banking issues.
"In the immediate term, the stronger euro is dampening competitiveness and thereby growth."
Paul Ashworth, managing partner at Cameron Harrison, is also concerned about Europe, specifically the Italian banks, which have a combined €400 billion in non-performing loans. But that official number is the tip of the iceberg, Ashworth suspects. "We would think about double the figure. Either way, the cost is a staggering 25 to 30 per cent of GDP."
Italy's referendum in December on its constitution is also a referendum on Prime Minister Matteo Renzi, Ashworth said. "Should it fail, the government falls, and probably the Italian banking system falls."
Modern economic crises have been sparked by banking crises, Ashworth points out, and the situation in Italy bears all the hallmarks and catalysts to "throw the global financial system into full-blown crisis".
Joel Beebe, portfolio manager at Wingate Asset Management, said his firm was keeping an eye on the dispersion between expensive growth stocks and value stocks, including financial, healthcare and industrials.
"The index may deliver muted returns over the next few years, but we may see a recovery in value stocks and at the same time a de-rating in momentum stocks," he said.
Beebe also has an eye on corporate debt levels, which he says are at a 12-year high on a measure of debt to earnings before interest, tax, depreciation and amortisation. That debt has been used to launch company buybacks and acquisitions to achieve growth in the absence of organic growth, but that avenue might be coming to an end.
Andrew Mitchell, portfolio manager at Ophir Asset Management, keeps his eyes on a stronger US dollar, and what effect it would have on emerging markets.
A stronger US dollar, on the back of rising interest rates, will strain EM financial systems, he said.
"China is particularly a concern, because their banking system is facing an increasing issue with non-performing loans."
![Should Italy's referendum fail, "the government falls, and probably the Italian banking system falls", Cameron ...](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/g/p/x/6/m/u/image.related.articleLeadwide.620x349.grqbmp.png/1475035100749.jpg)
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Shares have flatlined after a promising start, but the local market is still outperforming the rest of the region.
Banks are all trading higher, led by Bank of Queensland, which has hit a four-month high after Bell Potter lifted the target price for the stock while sticking with a 'hold' rating.
The initial move higher was a follow-through of the positive sentiment surrounding yesterday's debate after the polls showed a Clinton victory, said Gary Huxtable, client adviser and strategist at Atlantic Pacific Securities.
"However, much of this was already priced into our market during yesterday's session," Huxtable said.
With no clear market direction over the past few days, investors were beginning to place more weight towards individual companies as opposed to an overall market view.
Around the region, Japan's Nikkei is down 1.5 per cent, the Hang Seng in Hong Kong has dropped 0.7 per cent and the Shanghai Composite has slipped 0.2 per cent.
Equities in Asia gained yesterday on a perceived win by Democrat Hillary Clinton at the first presidential debate over Republican Donald Trump, who is seen as creating greater uncertainty for the US and global economies.
But the relief gave way to angst about the European financial sector, which is gripped by worries over the health of Deutsche Bank, whose shares hit a record low overnight.
![Banks are all higher, with Bank of Queensland leading the way.](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/1/m/8/6/z/8/image.related.articleLeadwide.620x349.grqb6r.png/1475034506588.jpg)
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It's a rate good day for Woolies investors: shares are up 2 per cent after the supermarket chain won its legal battle with former JV partner Lowe's.
Woolworths yesterday secured a stay on the US retail giant's application to wind up the joint venture used by the companies to run Masters hardware chain.
The court also ordered Lowe's to pay for some of Woolworths' legal costs. Woolworths announced in August it would close the struggling hardware chain.
Also helping supermarket stocks are some soothing words from the AFR retail summit, where analysts said they didn't expect Aldi to start a price war.
But traders have pointed out that Woolies and Metcash remain among the most shorted stocks in the market, indicating that many investors are still expecting the shares to fall.
![Woolies remains among the most shorted stocks on the ASX.](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/g/r/p/f/g/9/image.related.articleLeadwide.620x349.grq8oh.png/1475034714608.png)
![need2know](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/2/g/h/4/5/image.imgtype.columnistThumbnail.60x60.png/1427239371417.jpg)
Deutsche Bank strategists say the number of "buy" recommendations in the market from the sell-side is at the lowest level perhaps in history, and at the very least, close to record lows.
So with a market that is clearly challenged for ideas, the broker looks at recent share price move and analyst stock calls.
For example, "Amongst the banks, ANZ has outperformed and is viewed more favourably by analysts. CBA is in the opposite camp, and has seen its PE" - price-to-earnings - "premium shrink to a four-year low." Deustche favours Commonwealth Bank of Australia.
Or, "High PE stocks have generally softened after stellar performance in recent years. Yet several healthcare names have risen further and analysts have upgraded (Cochlear, Healthscope, Ramsay). These may be at risk of becoming crowded trades."
Those comments from Tim Baker and Joseph Kim.
![Nothing to buy.](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/g/r/q/8/c/v/image.related.articleLeadwide.620x349.grq8dj.png/1475031071430.jpg)
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Is NZ-listed Restaurant Brands worth $NZ10 a share in five years' time? Macquarie NZ analysts have thought about what the fast food operator would need to do to get there, and three things that would support the company's ambition. They conclude $NZ10 is "deliverable". Acquisitions would be necessary and the board has conveyed they are willing to go there with Australian deals in the quick-service restaurant category. (We use the word "restaurant" loosely, borrowing from industry jargon).
These days, the stock (NZ: RBD) is trading at $NZ5.75.
If you believe, as Macquarie seems to be suggesting, that the typical meal routine has shifted from three meals a day to greater emphasis on snacking, then RBD's KFC business could make a play for greater breakfast market share. You heard right. As the broker admits, global trends do not always play out the same way in other markets.
The broker cites a figure that 52 per cent of Americans are substituting snacking for a traditional breakfast. "We estimate a potential market size of $NZ45 million," or 15 per cent of KFC's current sales. As it happens, if fast-food trends shift to healthier menu items, then chicken is a category that can adapt fairly easily because you don't have to fry it. That is not a priority: the "double-down" burger remains a bestseller.
The next leg of this stock idea is KFC will begin delivery in the next six months. The company expects 30 per cent of KFC NZ stores will participate and this will earn a 30 per cent uplift in store sales, or a 10 per cent uplift in total KFC sales.
Then there's this observation, which we quote without comment, for now: "The forecast significant increase in the Maori/Polynesian and Asian representation of the NZ population over the next two decades is positive for RBD, with strong resonance for KFC."
Did you know that KFC applied for a liquor license in Australia? It was declined. But Macquarie's point is that RBD can apply the lessons of its brand experimentation in Australia over in NZ. It is toying with its "urban" format because KFC tends to be under-represented in city locations and so far it has not got the formula right.
![Snacking is taking share away from the breakfast category.](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/g/r/q/7/h/b/image.related.articleLeadwide.620x349.grq7jd.png/1475029895173.jpg)
![china](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/2/b/d/k/e/image.imgtype.columnistThumbnail.60x60.png/1429585740303.jpg)
Some more good news out of China.
Today we hear the Westpac MNI China Consumer Sentiment Indicator rose 3.3 per cent in September to a reading of 115.2 points from 111.5 in August, making it the highest since June. All sub-categories were up month-on-month and the largest upgrade came from "expected personal finances and business conditions" one year ahead.
"Out of those who thought business conditions over the year would improve, 32.1 per cent cited supportive government policy as the main reason for optimism," the survey says.
"The rebound in confidence is clearly a welcome development, particularly after the sharp slide over the previous three months," said Matthew Hassan, an economist at Westpac. "However, even with a recovery sentiment is still at a low level overall and yet to establish a convincing recovery. The September rise is a step in the right direction and the improvement in labour market expectations is an important positive but much of the detail, around spending and saving behaviour in particular, points to more lacklustre growth for consumer sectors near term."
Chinese investors still think bank deposits are the wisest place to put their savings, and fewer respondents chose property - just 13.9 per cent in September compared with 18.7 per cent in July.
![Sentiment rebounds in September.](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/g/r/q/5/q/u/image.related.articleLeadwide.620x349.grq5rr.png/1475027233956.jpg)
![US news](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/2/b/d/l/0/image.imgtype.columnistThumbnail.60x60.png/1427236013357.jpg)
Will Janet Yellen resign as Fed chief if Donald Trump is elected US president?
After another blistering attack at yesterday's debate on the integrity of the central bank and its chair, analysts reckon she won't have much of a choice.
Here's what Trump said: "We are in a big, fat, ugly bubble. And we better be awfully careful. And we have a Fed that's doing political things. This Janet Yellen of the Fed. The Fed is doing political — by keeping the interest rates at this level...when they raise interest rates, you're going to see some very bad things happen, because the Fed is not doing their job. The Fed is being more political than Secretary Clinton."
Capital Economics chief US economist Paul Ainsworth reckons that Yellen - whose term expires in early 2018 - would fall on her sword almost immediately, not least to take the heat off the central bank.
While Yellen has already rejected similar claims, Ainsworth says that the veracity of Trump's claims were irrelevant.
"If those claims are made publically to a viewing audience of up to 100 million Americans, and a majority of those Americans then go on to vote for Trump in November's election, then what choice does Yellen have?"
Ainsworth tips that vice-chair Stanley Fischer would lead the central bank until Trump found a successor: "Fischer would make an admirable short-term replacement, however, which should limit any market fallout in the immediate aftermath."
![Donald Trump has accused Fed chief Janet Yellen of fuelling a bubble by keeping rates on hold for political reasons.](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/g/r/l/n/x/f/image.related.articleLeadwide.620x349.grq4fn.png/1475026270272.jpg)
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A panel of top analysts at the AFR's retail summit this morning agreed that Aldi is unlikely to spark a supermarket price war.
While Citi analyst Craig Woolford said there were signs of slowing sales for the chain on the east coast, UBS analyst Ben Gilbert reckoned there's still a big opportunity for Aldi to increase its share of the consumers' basket across the nation - which means it remains a big risk for Coles and Woolworths.
JPMorgan's Shaun Cousins stressed that Aldi was unlikely to use a price war to gain market share. Instead it will focus on lifting quality to win over shoppers, he said.
Woolford agreed and said Aldi wants to boost the level of brands it has on the shelves.
On the outlook for Woolworths, Cousins said the market was looking for positive comparable sales figures.
Gilbert said Woolworths has been too focused on "me too" initiatives that have essentially copied tactics from other retailers. Management is now being more proactive and some other retailers have been forced to follow their lead.
Cousins said he expected supermarket margins to find a floor at 3-4 per cent (compared to around 5 per cent at the moment) with the big risk to this being the entrant of a new competitor like Germany's Lidl, who are known as being very competitive.
Here's more from the retail summit ($)
![Aldi is considered more likely to expand its brands than start a price war.](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/g/r/i/z/u/d/image.related.articleLeadwide.620x349.grq3t8.png/1475024803137.jpg)
![Tenants market: residential rents are barely budging.](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/1/m/8/x/b/6/image.imgtype.columnistThumbnail.60x60.png/1440644111173.jpg)
Sydney is at risk of a "housing bubble" but Vancouver, London and Stockholm are even frothier markets as property prices overheat again just a few years after the last global correction, according to a report from UBS Wealth Management.
The UBS Global Real Estate Bubble Index report analysed residential property prices in 18 cities around the world.
While property overvaluations have become more pronounced in many major cities since 2011, according to the report, Vancouver faces the greatest risk of a housing bubble, while London is the riskiest city among the major financial centres.
Other cities at risk of a housing bubble are Munich and Hong Kong, while San Francisco, Zurich, Paris, Geneva, Tokyo and Frankfurt are considered overvalued. This year's list sees six cities at risk of real estate bubbles, up from just two (London and Hong Kong) last year.
Flagging up a 'bubble risk zone', the report said that prices within that zone have increased by 50 per cent on average since 2011.
UBS blames central banks and ultra-loose monetary policies for this latest global bubble.
"What these cities have in common are excessively low interest rates, which are not consistent with the robust performance of the real economy," the authors of the report stated.
UBS says Sydney's housing market has been overheating since the city became a target for foreign investors several years ago and, while it was the least risky city in Asia Pacific in 2012, it has now overtaken other cities in the region.
"When combined with rigid supply and sustained demand from China, this has produced an ideal setting for excesses in house prices," the report said.
But the authors noted that adjusted for inflation, Sydney prices peaked in 2015.
According to UBS, it is impossible to predict just what might pop the bubble, but the authors offer a few possibilities.
"The situation is fragile for the most overvalued housing markets. A sharp increase in supply, higher interest rates or shifts in the international flow of capital could trigger a major price correction at any time," the report went on to warn.
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Shares have bounced at the open, led up by the utilities sector after AGL surprised investors with a $600 million buyback.
The ASX has added 0.4 per cent to 5429.7 and the All Ords is up 0.4 per cent at 5516.0.
AGL is the top performer among the biggest 200 stocks, surging nearly 7 per cent.
Gold producers are among the losers, with Newcrest falling 1.35 per cent and Resolute plunging 6.85 per cent after the gold miner came out of a trading halt due to a capital raising.
Health stocks are also feeling a bit of pressure, as CSL slips 0.25 per cent and Ramsay drops 1 per cent.
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Energy utility AGL has caught the market off-guard this morning after outlining plans to buy back 5 per cent of its capital as well as raising its dividend payout ratio.
The buyback, to cost an estimated $596 million came as analysts had begun to rule out the prospects of a buyback due to likely investment on growth projects.
The company also said it will raise its dividend payout ratio to 75 per cent, from 60 to 65 per cent, although the level of franking may decline to 80 per cent.
The company also said it expects its underlying profit in year to June 2017 to run at $720 million to $800 million, compared with $701 million earned in the latest financial year.
When releasing its year to June results last month, AGL highlighted the unseasonably warm weather in July and a $100 million squeeze to margins on its gas portfolio.
![AGL announces a $500 million buyback.](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/g/r/j/c/4/v/image.related.articleLeadwide.620x349.grq1cj.png/1475021566876.jpg)
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Nickel surged to a seven-week high on worries of tightening supply after the Philippines ordered more nickel mines to be shut until they can adhere to strict new environmental laws.
Benchmark nickel on the London Metal Exchange ended up 0.9 per cent at $US10,630 a tonne, off an earlier session high at $US10,900.
The Philippines, the world's top supplier of nickel ore, yesterday recommended 20 more mines be suspended until operators address lapses. The government has given them seven days to explain any violations of mining and environmental laws.
Thirty mines in the Philippines, including 18 nickel producers, have now either been suspended or recommended for suspension. Yesterday, gold and copper producer OceanaGold told the ASX it has been caught up in the crackdown, suspending its shares.
Meanwhile, local nickel miners Western Areas, Independence Group and Panoramic Resources all surged in late trade yesterday after the suspensions became known.
"Today the suspensions are a big deal, but we have to wait and see what the longer term impact might be," said Citi analyst David Wilson.
"Are the suspensions permanent, do they have time to clear up issues? Some of the mines haven't been told what the problems are and generally they have been compliant with regulations."
About two-thirds of global supply is used to make stainless steel. China is the world's top consumer of nickel.
Goldman Sachs analysts estimate about 223,000 tonnes of nickel output or 11 per cent of global supply could be suspended.
"(But) the government has said the companies affected have seven days to respond, before final suspension decisions will be handed down," Goldman said in a note.
"This suggests that the final amount of supply suspended as a result of the audit could be well below the headline level, and indeed, could theoretically be anywhere between zero and 180,000 tonnes."
Analysts also say the boost to nickel prices may recede as the market realises that nickelore production in the Philippines this year is already falling and being replaced by Indonesian ferronickel.
![Nickel prices have surged after mine closures in the Philippines.](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/g/n/i/k/m/3/image.related.articleLeadwide.620x349.grq14g.png/1475020471267.jpg)
![The yield on the Australian 10-year](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/1/m/8/w/x/g/image.imgtype.columnistThumbnail.60x60.png/1475200777471.jpg)
Finland has become the latest member of the negative yields club, the third country in the eurozone to see its 10-year borrowing costs drop below zero as part of a broad rally in bonds.
Investors are now willing to pay Finland to lend to it for 10 years, a boon so far only granted to Germany and Netherlands within the single currency bloc, and only to a handful of nations globally.
Eurozone government bonds, seen as a safe haven in times of stress, have rallied in recent days as concerns over Europe's financial sector has hit stock markets.
The yield on Finland's 10-year bond fell 3 basis points to minus 0.023 per cent, as other eurozone equivalents fell 3-4 bps. Germany's 10-year bond yield fell to its lowest since August 15, down 4 bps on the day at minus 0.15 per cent. Australian bonds have also rallied over the past days, driving their yield back below 2 per cent.
"We have seen for a couple of days now some safe-haven flows and spread-widening in the periphery, especially in Italy and Portugal, due to country-specific risks surrounding" those nations, said Daniel Lenz, a market strategist at DZ Bank. "We also have concerns about the banking sector again" causing demand for the safest assets, he said.
Deutsche Bank shares tumbled to a record amid investor concern about its capital buffers.
"There are less concerns that central banks worldwide could reduce" their easing policies after the Fed and Bank of Japan meetings last week, DZ's Lenz said. "This in general brought some relief rally" to global bonds, he said.
![Australian 10-year yields (white) v US (green) and German (yellow) yields over the past five years.](/web/20161001102432im_/http://www.smh.com.au/content/dam/images/g/r/q/0/t/x/image.related.articleLeadwide.620x349.grq0uq.png/1475019523375.jpg)
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