That's it for Markets Live today and for the week - and what a week it's been.
Thanks for reading and your comments.
Have a relaxing weekend and see you all again Monday morning from 9.
And a final thought here, bringing together the man of the week and Australia's passion No.1, courtesy of Michael Pascoe who asks if Donald Trump is going to burst Australia's housing bubble?
The caveat has go up front: given his propensity for lying, exaggerating and generally raving, nobody can know what Donald Trump will actually do as president. He probably doesn't know himself.
But according to the bond market reaction, he will burst Australia's east coast housing bubble by causing interest rates to rise.
That would be the relatively nice way to prick the bubble. The more common fear is that he could start a trade war with China that would cause a global recession – one we wouldn't escape. That definitely would not be a nice way to achieve lower housing prices. So let's hope there is enough sanity left in Congress to prevent such madness and just consider the more benign interest rate story.
With the advent of Trumpistan, there is the possibility Trump will be an inflation driver. That would start changing the economists' forecasts. It certainly makes them less certain.
Genuinely stronger inflation in the US though would play a role in lifting global inflation – a more fundamental and important shift. If it happens, Australian individuals will have to start thinking about the chances of a rate rise.
The increased borrowing power delivered by interest rate cuts has been the key factor is pushing east coast housing prices ever higher this year. Given the record household debt those cheap rates have encouraged, it will only take a tiny touch of the monetary brakes to have impact – taking the top off the bubble.
A final Trump bump doubled the day's gains and brought and end to an extraordinary week in markets, after the surprise US election result led to an equally surprising rally in the sharemarket.
The ASX 200 climbed 42 points or 0.9 per cent today - with half of that rise coming in the final minutes of trade. Over the five days the index surged 190 points, or 3.7 per cent, to 5371, breaking a four-week losing streak that had been blamed on growing worries of a Trump victory. Instead, post win, we had the best session on the ASX in five years on Thursday, while the Dow Jones hit new nights last night.
The sharpest movers among the big names were the miners, where commodity prices incredibly gathered even more momentum. The iron ore price hit a two-year high overnight, and coal and copper prices also achieved even loftier highs. BHP and Rio climbed 12 per cent this week, while Fortescue soared 19 per cent. South32 added 12 per cent.
The banks were well supported too, despite a reporting season that tended towards the uninspiring. CBA, Westpac and NAB were up 7 per cent this week, and ANZ 5 per cent.
CSL enjoyed a 4.6 per cent bump after weeks of sagging.
Of course, not everybody was a winner this week. Bond prices plunged as investors frantically upped their expectations for inflation in a Trump-stimulated US economy. That dramatically undercut the case for yield stocks, where selling was heavy.
Sad!
Perhaps a little unusually, Telstra was caught up in this thematic, dropping 3.7 per cent over the week to a two-year low. Transurban dropped 6.7 per cent, Scentre Group lost 5.5 per cent and APA Group lost 6.1 per cent as the attraction of listed property, utilities and infrastructure stocks waned.
Gold miners were also on the nose, with Newcrest falling 5.2 per cent.
Late markets wisdom:
.@TheBubbleBubble
— Tom Petruno (@tpetruno) November 11, 2016
Dude, remember: Markets can stay irrational longer than you can remain solvent.
Iron ore may be headed for a fall. Prices that have almost doubled since bottoming will face growing pressure on rising supply from Australia and Brazil as well as headwinds to demand in China, according to Capital Economics.
"We think it is overdone," Caroline Bain, a London-based commodities economist at the group, said, referring to the surge that's taken the raw material to the highest level in two years near $US75 a tonne. "The Chinese authorities are taking steps to take the heat out of the property market and the impact of earlier stimulus will start to fade."
Amid the post-US election clamour, risk assets have staged a massive rally, according to Sucden Financial Ltd.
"Funds have been holding pretty substantial cash reserves and by the looks of the recent market rally, particularly in the base metals and iron ore, we're now seeing a lot of that capital being deployed," Sucden analyst Kash Kamal said. "The rally [in iron ore] has been overdone, the fundamentals suggest we're still oversupplied."
Iron ore prices may also have benefited this quarter as mainland investors reacted to a squeeze in coal supply in China by pouring funds into that commodity and others. As authorities and exchanges have moved to clamp down on coal and steel, that may have prompted investors to switch funds into iron ore, according to ANZ.
"Looking at steel-making costs, metallurgical coal prices have risen substantially," and combined with higher iron ore prices, it's likely there will be a near-term correction, according to Sucden's Kamal. "The market is still in backwardation, so even with the current market exuberance, the consensus expectation is for prices to head lower on a mid-term basis," he said.
"We expect prices to fall back over the next few months and to fall further in 2017 as Australian and Brazilian producers continue to ramp up output," said Bain at Capital Economics. The two countries are the world's largest seaborne suppliers. "Our end-2017 forecast is just $US45 per tonne."
And another stock tip from the Sohn Hearts & Minds conference, this time from Platinum Asset Management founder Kerr Neilson: 58.com (Wuba).
The Nasdaq-listed business known as Wuba is the leading online merchant and consumer gathering place in China. Its two main businesses target property and blue collar job listings.
"Remarkably there's a big turnover in blue collar workers," Neilson observed. "If you take the top ten cities they have a population of 200 million. The next 10 cities have a population of 100 million."
The secondary market in China is "nascent" in cars and in property compared to the market for new goods. "You look at this type of business and you can see the drivers that make it interesting for someone in China," he said.
Wuba has 400 million monthly average visitors and about 10 million merchants. At the moment it is recording four transactions per visitor per year, Wuba thinks 12 is achievable. Merchants can buy a membership for around $600 upfront.
"But the real money spinner comes from getting people to trade up. How do you get seen by all the visitors? You pay for real time bidding which is actually a time slot in the day or month." Priority listing is another option.
One of the shortcomings of the business is it is not an "addiction" stock like a Facebook, and in property, transactions can be cyclical. "There's quite a lot of work still going on and that's why the stock is down from $US55 to $US34." Neilson described a "wonderful confluence of negatives" that made it an attractive contrarian pick.
Yes, miners are soaring on bets a President Trump will boost infrastructure spending in the US, but the biggest macro impact of the election result has been the spike in inflation expectations.
Investors have been pricing in higher interest rates under an incoming Republican administration that is expected to increase spending seen as inflationary, pushing up bond yields.
The question is if rising inflation will prompt the Fed to step in earlier and lift rates, possibly choking off an economic upturn.
A US recession is still likely despite expectations that Trump's fiscal bonanza will stimulate the economy, says Saxo chief economist Steen Jakbsen.
"The higher yields (which were the real result of Trump being voted into office) will kill whatever is left of US growth because not only is the political system running on empty, so are many US companies."
Indonesia's rupiah plunged the most in five years, prompting the nation's central bank to say it stepped in to stabilise the market.
The rupiah sank 2.7 per cent to 13,495 per US dollar in Jakarta this morning, setting it for the biggest decline since September 2011, according to prices from local banks compiled by Bloomberg. It dropped as much as 3 per cent to reach a five-month low of 13,545.
The currency weakened after a few short-term investors rushed to the non-deliverable forwards market to hedge, causing the contracts to drop significantly, Nanang Hendarsah, head of financial market deepening at Bank Indonesia, said. The monetary authority is already in the market to stabilise the rupiah, and doesn't see much fund outflows and expects the move to be temporary, he said.
The rupiah led declines in Asian currencies as sentiment toward emerging-market assets soured on speculation a Donald Trump-administration will enforce protectionist trade policies. The US could drop out of Trans-Pacific Partnership trade deal within his first 100 days in office, Politico reported, citing an internal transition team document.
"The rupiah fell in response to declines in the region, so it isn't domestically driven," said Branko Windoe, head of treasury at PT Bank Central Asia, Indonesia's largest bank by market value. "We've seen since the US election, looking at the policies outlined during Trump's campaign, people are trying to calculate the impact on Asia, especially on trade."
South Korea's won sank 1.4 per cent, Thailand's baht weakened 0.6 per cent and the Philippine peso slid 0.5 per cent. The prospect of increased US spending under Trump's presidency propelled the Bloomberg Dollar Spot Index to the highest since March on Thursday.
The drop in the rupiah was fuelled by "thin liquidity and strong dollar sentiment," said Wu Mingze, a foreign-exchange trader in Singapore at INTL FCStone Inc., a Nasdaq-listed global payments-service provider. "Emerging markets are going full crazy at the moment."
Indonesia's 10-year sovereign bond yield was little changed at 7.47 per cent, while that on five-year notes dropped two basis points to 7.11 per cent.
Sticking with commodities, copper has edged back following several days of frenzied gains but was still on course for its biggest weekly jump in five years, after Donald Trump's surprise US election victory sparked a flurry of buying.
Trump has said that he plans to fix inner cities and rebuild highways and infrastructure, and while there is little detail around his plans, hopes for a spending splurge have breathed fresh live into metals and infrastructure.
"It's been building in the past couple of weeks, and Trump has kicked it along in the past few days," said ANZ analyst Daniel Hynes. "It's been more a shift around where the market sees demand over the course of 2017."
Three-month copper on the London Metal Exchange slipped by 0.6 per cent to $US5566 a tonne, following a 3.5 a per cent gain in the previous session. It's on track for an 11.7 per cent weekly rise, the biggest weekly advance since October 2011, when prices climbed 14.4 pct on the week.
Expectations for copper demand have shifted in recent months due to consistently improving economic indicators out of China that have encouraged analysts to revise up demand forecasts.
China's factory activity expanded at its fastest pace in more than two years in October.
"Views on China improved compared with expectations at the start of the year as demand surprised to the upside," Citi said in a research note. "Chinese 2016 demand estimates now range between 5-7 per cent compared to 0-3 percent projections at the start of this year."
China will seek support for a Beijing-led Asia-Pacific free trade area at a regional summit in Peru later this month, Chinese officials said on Thursday, after Trump's election win dashed hopes for a US-led free trade pact.
Market expectations of another RBA rate cut have fallen to their lowest in months, with Citi seeing a just 4 per cent chance of more easing in December, moving up to a high of 28 per cent in the first half of next year.
The bank's economists are among the majority who tip the central bank will hold fire for an extended period.
But they admit that a Trump presidency does increase the risk that the RBA may move back to an easing bias in the foreseeable future.
"Trump's threat to impose tariffs on Chinese imports, if carried through, could trigger a trade war with China which would have significant negative spillovers for Australia."
Whether the RBA would act on this depends on the medium-term impact of a Trump administration's policies on global demand growth, trade and investment flows, particularly for Australia's major trading partners.
"Regardless, we don't see the RBA rushing to make a judgment on these uncertainties, particularly given the likely income smoothing role that a lower Australian dollar would provide," the economists say.
US fiscal stimulus and some tightening of monetary policy is likely to raise the US dollar, helping to keep the Aussie more consistent with rebalancing the economy, they expect.
Santos shares have jumped more than 6 per cent after Chinese private equity firm Hony Capital paid $159 million to increase its stake, eight months after selling a major shareholding in the Australian oil and gas player to another Chinese firm.
Santos confirmed to the ASX that Hony Capital bought 40 million shares - equal to 2.25 per cent of Santos's issued capital - after the close of market on Thursday, taking the Chinese group's stake to 3.2 per cent.
Hony Capital paid $3.98 a share - an 11 per cent premium to Thursday's closing price - and Santos shares are up 6.5 per cent to $3.81.
Santos made a $500 million private placement to Hony in November 2015 as part of $3.5 bilion in capital raising initiatives. In March this year Hony sold its 11.7 per cent stake in Santos to ENN Group - a major Chinese gas distribution company.
Here's the latest from the Sohn Hearts and Minds investment conference, where fund managers are pitching their top ideas:
Stock: Transurban; Investor: John Pearce, Unisuper
If history is any guide, the world could be "closer to the start of the yield trade than the end of it," he says, admitting it is a non-consensus view.
"I personally can't go past a tollroad operator, Transurban," Pearce proposed. The super fund is the largest investor in Transurban.
"You all know the company because you've all been customers whether you like it or not. Here we have a company that's paying a yield of 5 per cent, it's not promising it's paying a yield of over 5 per cent. It's got long term concessions and monopoly assets."
For management to qualify for their long term incentives the first hurdle is 9 per cent cash earnings growth. "Call me a cynic, that means 9 per cent is in the bag," the fund manager quips.
He urged investors to "look through the noise". Under $10 a share, he believes investors are not at risk of paying too much for the stock.
"What if I'm wrong about inflation? What if it rears its ugly head well Transurban can just increase its tolls."
Stock: Armidale Investment Corporation; Investor: Geoff Wilson, Wilson Asset Management
Wilson picked a small cap financial services company, a stock which he believes could be ahead 50 per cent within 12 months.
Armidale is an asset finance broker which Wilson says is a $42 billion industry.
"It's growing at 10 per cent plus per annum. These guys have made some recent acquisitions and they will benefit as the industry consolidates."
The stock meets Wilson's criteria to find well run companies with good earnings growth, which is the main driver of share price performance.
Earnings per share are expected to grow at 25 per cent-plus each year over the next two years and will lower the price to earnings ratio to under 10 times.
Private equity firm TPG and its partners have confirmed they have decided to postpone the float of Alinta Energy, which would have been Australia's biggest this year, to the first quarter of 2017, due to market jitters in the wake of the US election.
The owners had planned to launch the prospectus for Alinta, valued at around $3 billion including debt, last Monday and then opted to wait a week to see what happened following the US presidential vote on Tuesday.
With global market volatility having spiked in the wake of Republican Donald Trump's shock win, the owners, led by TPG, shelved it to the new year.
"As flagged, this decision was made due to the potential for market volatility following the US election and the proximity to Christmas," a spokesman said in an emailed statement.
"Investor interest has been strong, and the shareholders believe the rescheduling will allow for the best outcome for the current and future owners of the business."
The decision comes following the debut this week of another TPG float, Inghams Group, after it halved the listing size to foster a stronger opening amid generally weak investor sentiment towards recent initial public offerings.
Lloyd Blankfein may be known for making winning investment calls, but like so many on Wall Street the Goldman Sachs chief made the wrong bet in the presidential election.
During the campaign, Blankfein had voiced support for Hillary Clinton but on Thursday at the NYT's annual Dealbook conference, the Goldman chief sounded willing to see how Donald Trump governs.
Blankfein said he was not surprised by the two-day rally in the stock market, even as some analysts had predicted a big dip if Trump was elected, because the Republican's policies - most likely a mix of corporate tax cuts and regulatory rollbacks - will be "market supportive."
He was asked about a media report indicating Trump was considering JPMorgan Chase's chief executive, Jamie Dimon, for Treasury secretary.
"He would be a great Treasury secretary," said Blankfein. He also said Trump's finance chairman during the campaign, Steve Mnuchin, a former Goldman executive, is "a highflier, a partner at a young age. He did very well. He is a smart, smart guy."
On Wall Street issues, Trump has put forth seemingly contradictory proposals. He has said he will repeal the Dodd-Frank financial overhaul law, though his party's platform calls for breaking up the big banks.
Blankfein said he thought that neither proposal would gain much traction. "If you want to be good for bankers you have to have policies that drive economic growth," he said.
"The election results in the US show democracy at work," Blankfein earlier told employees in a voicemail message. "It also means change, which isn't necessarily a bad thing. Change is often the agent of progress in ways we can't always readily see in the early days."
Government bonds are reeling around the world as inflation expectations rise, and Aussie sovereign debt is no exception.
The yield on the benchmark 10-year government bond has jumped another 9 basis points to 2.59 per cent, its highest since late April. Bond yields move in opposite direction to prices.
One immediate result is that the Australian government now has to offer investors more yield in return for their cash, as today's auction of $1 billion worth of 12-year bonds yielding 2.7 per cent shows.
So today Oz sold $1b worth of debt at 2.71% over 12 years. On Sept 7 Oz sold a similar amount at 1.89% over 11 years. Trumponomics...
— Shane Wright (@swrightwestoz) November 11, 2016
On Wednesday night, as global markets were in meltdown mode on the prospect of a Trump victory the yield slumped as low as 2.223 per cent.
But yields quickly rebounded as bonds were sold off amid speculation the Republican will ramp up spending to spur growth, accelerating the pace of price gains.
In less than 24 hours after becoming president elect, Trump has managed to accomplish what global central bankers have struggled to do: increase inflationary expectations, Payson F. Swaffield chief income investment officer Eaton Vance said.
"Apart from the major fiscal stimulus during the financial crisis in 2008, global central banks have been the only game in town, in terms of keeping a lid on global rates, providing liquidity and boosting prices of financial assets, yet depriving the markets of their important price-discovery mechanism," he said.
"Overnight, the Trump victory has changed this, adding an important new element for the markets to digest, and letting them act like markets again."
However, bonds have been out of favour for several months now, as markets brace for the next US rate rises, other key central banks refrain from further monetary easing and inflation expectations slowly edge higher. Trump is just accelerating this re-assessment of fixed income markets.
The following chart linking the sell-off in highly yield-sensitive real-estate stocks to the fall in bonds (or rather rise in yields), shows that yields hit their lows (the yield graph is inverted) in early August after the Brexit vote.
Norway's Central Bank popped up with a significant stake in APN Outdoor Group this morning.
Norges Bank Investment Management informed the ASX it now owns 8.4 million shares in APN or 5 per cent, which is worth about $45.3 million at the current price of $5.40 per share.
For some perspective, Norges Bank currently manages about $1.14 trillion of money, which comes from Norway's oil sales and will be used to "safeguard wealth for future generations". Makes Australia's $124 billion Future Fund seem puny.
As for what Norges Bank sees in APN Outdoor? They are just looking for "good returns over time", according to the website. But, they won't take out more than 10 per cent in any company.
APN shares initially gained 0.7 per cent, but have since slipped back to be down 2.6 per cent at $5.26.
Howard Marks says the "jury is out" as to what the shock election of Donald Trump as US president means for the economy and financial markets.
"I am in the 'I don't know camp'. We should not rush to conclusions," the founder of $US100 billion fund manager Oaktree told the audience at the Sohn Hearts & Minds Investment Leaders conference in Sydney.
"On paper he should be a pro-business president and objectively speaking he should be more pro-business than Hillary Clinton would have been," Marks said, but added he will be watching to see which policies Trump will pursue and will be able to pursue and who he appoints.
"He said lots of things people didn't like but he said some supportive things for the business environment such as cutting taxes. The negative is his view on trade."
Another positive is Trump's pledge to invest in America's infrastructure.
"It will be a nice thing and put people to work but I don't think it will redirect the trajectory of the economy, but it's a plus and something people can agree on."
The rise of populism would become a feature of the US political and economic environment.
"The Trump candidacy didn't make people angry - it touched on an anger and a division. Globalisation and automation has cut into jobs and is going to cut in further."
He feared that sustained lower growth will be a challenge for the nation.
"America has reached its potential so I think we are going to have social issues to deal with."
Marks said there were three stages to a bull-market – the final one being the moment when the market believes that good times will never end, which compels investors into thinking that no price is too high.
So are we in the final stage?
"It's a funny stage because I don't think anyone is that bullish but on the other hand even if they are not thinking bullish they are acting bullish.
"There is mandatory optimism which his being reflected in security prices and issue quality - we are in the seventh inning if not the eighth."
Stay tuned for more from the Hearts & Minds Investment Leaders conference today, where a number of top fund managers will share their key stock picks
The Trump rally on the ASX is fading a bit but miners and banks are still getting strong tailwind, offsetting losses in other sectors to push the overall market higher in early trade.
The ASX has added 0.3 per cent to 5345.5, while the All Ords is up 0.3 per cent at 5423.6.
"The firm open by the ASX 200 this morning masks mixed reactions to the Trump themes," said CMC chief analyst Ric Spooner. "The potential for a significant increase in US demand is a game changer for commodities like copper and is fuelling the rally in Australian mining stocks."
"However, the story is not so rosy for the utilities and real estate sectors this morning. The last 24 hours have seen another sharp jump in bond yields, which is putting pressure on stocks in these sectors."
BHP is extending yesterday's strong rally, adding another 1.8 per cent after key commodity prices including copper and iron ore rallied overnight. South32 is up 4.3 per cent and Rio has gained 1.8 per cent.
BHP shares above $25 for the first time since October 2015 as the Trump bump continues
— Peter Ker (@pgker) November 11, 2016
Meanwhile, all the big banks are more than 1 per cent higher, profiting from a surge in the US banking sector on strong indication the Trump administration will scrap key banking regulation.
"Yields are moving their way higher, that's good for banks," said Art Hogan, chief market strategist and director of research for Wunderlich Securities. "If there's going to be a friendlier regulatory environment that's going to be good for banks. That's the tailwind behind financials we haven't seen for a long time."
Apart from materials and financials, all other sectors are in the red, with yield-sensitive sectors such as utilities (-2%) among the biggest losers.
Gold miners are also being battered again, with Newcrest down 3.7 per cent.
The Australian dollar was buffeted by conflicting global forces overnight, as traders weighed the support of continued powerful commodity price rally against a sharp rise in US bond yields following president-elect Donald Trump's surprise victory.
The Aussie climbed as high as 77.4 US cents as traders jumped into the currency after iron futures in China surged by their 9 per cent limit and as copper prices enjoyed their best back-to-back gain since 2013.
But after spot prices in the bulk commodity settled a massive 4.4 per cent higher at a two-year high of $US74.12 a tonne, the Aussie went backwards.
The Aussie dropped as low as 75.68 US cents in early morning trade as investors' attention switched to further falls in US Treasury bonds, where investors extended their bets that Trump's policy platform would prove both highly stimulatory, which would boost growth and inflation, as well as very expensive, which would worsen the US government's financial position – both reasons to sell Treasuries.
The upward momentum in the greenback may have further to run, CBA currency strategist Elias Haddad said.
"We anticipate the US dollar will make new cyclical highs against most major currencies under a Trump administration," Haddad said. "Trump's economic policies are inflationary and will force the Fed to raise the funds rate at a faster pace than otherwise."
"Moreover, capital inflows to the US will increase under a Trump administration because the cut in the company tax rate will bolster the US equity market and generate a repatriation of US profits back into the US economy."
While the currency has proved resilient in recent days, the US election result "will have a lasting and negative impact on the Aussie," ANZ head of currency research Daniel Been said.
Been pointed to contrasting fortunes of the Aussie versus the steep decline in regional currencies, where fears of a stronger US dollar have outweighed the positive impact of strengthening commodity prices. But Been said "the sustainability of this divide is very questionable".
"Ultimately, given the importance of low bond yields to the flow of funds over the past cycle, we would interpret the price action in emerging markets, if sustained, as a leading indicator for the Australian dollar."
Here's a bit more on what got investors so excited about bank stocks overnight: Donald Trump is translating some of his populist campaign rhetoric into policy statements, including the contention that the Dodd-Frank Act should be scrapped because it has made Wall Street banks an even bigger threat to the nation's economy and working families.
After the government's answer to the 2008 financial crisis, the "big banks got bigger while community financial institutions have disappeared at a rate of one per day, and taxpayers remain on the hook for bailing out financial firms deemed 'too big to fail'," says a statement posted on Trump's official transition website. "The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation."
Despite the anti-big bank rhetoric, investors clearly saw this as a positive for the sector, lighting a rocket under the sector's shares, with Wells Fargo soaring more than 7 per cent.
The new administration's plans for financial regulation could pull from a proposal released earlier this year by Representative Jeb Hensarling, the Texas Republican who leads the House Financial Services Committee. His bill - dubbed the Choice Act - calls for ripping up core parts of Dodd-Frank, including a provision that empowers the government to dismantle failed banks. He also wants to do away with Volcker Rule restrictions on banks' trading and investments, and to weaken the reach of the Consumer Financial Protection Bureau.
In addition to repealing Dodd-Frank, Trump's transition website outlines several policies that will be familiar to those who followed his campaign, including calls for a moratorium on new rules so existing measures can be reviewed. It also broadly addressed a tax-code overhaul, saying Trump's plan "can be summarised as lower, simpler, fairer, and pro-growth."
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