That's it for Markets Live today.
Thanks for reading and your comments.
See you all again tomorrow morning from 9.
And just to leave you on a high note, you'll be *thrilled* to hear that the sharemarket float of messaging phenomenon Snapchat is likely to make chief executive Evan Spiegel and his Australian fiance, model Miranda Kerr, one of the world's richest young couples.
Snapchat's parent, Snap Inc, filed paperwork for an initial public offering that may value the company as high as $US25 billion ($33 billion), The Wall Street Journal reported.
Mr Spiegel, a 27-year-old co-founder, is the driving force behind the company.
Having proposed to the 33-year-old Ms Kerr five months ago, the couple could be worth around $3.9 billion if the company lists at the top end of the valuation range. Morgan Stanley and Goldman Sachs have been assigned as underwriters, the Journal reported.
A notorious partier [much like your Eds] from a well-off Los Angeles family, Mr Spiegel founded Snapchat when he was a student at Stanford University five years ago studying product design and the social chair of a fraternity.
Snapchat was initially designed for sexting - the app was used to send short video messages that erased themselves after a few seconds. But it became a hugely popular rival to Instagram and a popular medium for advertisers chasing hard-to-get younger people.
The app is used by more than 150 million people daily, including 41 per cent of American 18 to 34-year-olds, Nielsen estimates.
A plunge in metal prices set the scene for a flat session on the ASX, as sharp falls in the major miners was only partially offset by gains in big banks and a strong showing from energy stocks.
BHP Billiton fell 2.3 per cent, Rio Tinto 3.4 per cent and Fortescue 3.8 per cent after iron ore plunged 6.5 per cent on Tuesday night. Copper also fell sharply, continuing a retreat from a rally that saw its price jump 11 per cent last week. South32 lost 0.8 per cent.
The wild swings in commodity prices have "got to be sentiment driven", Arnhem Investment Management portfolio manager Mark Nathan said. "The supply and demand balance doesn't drive a 5 per cent move on a daily basis."
The S&P/ASX 200 Index was up by the barest of margins to 5328 points. The major banks provided much of the support to the bourse, as ANZ added 0.8 per cent, CBA 0.6 per cent and NAB 1 per cent, while Westpac could only manage a 0.1 per cent gain.
But it was energy stocks which were the standout performers, climbing 2.3 per cent as a group, including a 2.4 per cent gain in Woodside Petroleum and a 3.4 per cent jump in Oil Search. Brent crude oil eased through the Asian trading session, but that came after a 5.7 per cent surge on Tuesday night.
Wesfarmers added 1.2 per cent on reports that the conglomerate is looking to sell two coal mines, while Woolworths dropped 0.3 per cent following the surprise resignation of the chief executive of its Big W business.
Global biopharmaceutical firm CSL lost 2.3 per cent, despite reporting a positive drug trial, as healthcare names came under pressure, with Mayne Pharma falling 5.2 per cent and Ramsay Health Care 2 per cent.
Listed property stocks enjoyed some relief, managing to climb 0.1 per cent as a group as the intense recent selling in global bonds eased.
Online property classifieds business REA Group was one of the worst performers on the ASX today, dropping a hefty 4 per cent to $49.80.
Since its recent peak at the end of July, the former market darling has lost close to a quarter of its market valuation.
This fits a with the recent trend of a "huge derating of the technology sector," Arnhem Investment Management portfolio manager Mark Nathan said. That included "internet-type names such as REA Group, Carsales and Technology One," he said.
Nathan said that names trading on high price-to-earnings multiples are particularly vulnerable to climbing bond yields, and this trend has only intensified since last week's US presidential election.
That's because a high P/E suggests investors are paying a lot for futures earnings growth, and tomorrow's profits are worth less today once a higher discount rate, such as the long-term bond yield, is applied.
But Nathan said he believes "most of those stocks offer pretty good entry prices now, given their long term growth potential". Broker analysts concur, with Deutsche Bank, Shaw & Partners and UBS all upgrading REA Group last week.
A Sydney insider trader has escaped a jail sentence after he pleaded guilty to trading on the tipoffs he received from his friend nearly a decade ago.
At the NSW District Court on Wednesday, Judge Christopher Armitage sentenced Fei Yu to one year of good behaviour bond and ordered him to pay a $10,000 fine and a $17,000 donation to not-for-profit group Financial Literacy Australia. He faced the maximum of five years in jail and a $220,000 fine.
Yu had pleaded guilty to one charge of insider trading in March, with a second charge of insider trading to be taken into account on sentence.
According to the Australian Securities and Investments Commission, Yu invested $35,000 in Veda shares and contracts for difference in January 2007 after he received a tip-off about a proposed takeover of Veda by Pacific Equity Partners. The shares were held in the name of Yu's mother and an associate. Yu made more than $20,000 in profit from the trades.
Meanwhile, CommSec has paid a $200,000 fine for allowing the relative of a deceased client to trade shares on the dead person's online account for months after the broker was told about the client's death.
The failure to lock the dead client's online share-trading account was revealed by the corporate regulator, as it also highlighted broader problems in CommSec's handling of deceased estates.
Here's more on the CommSec story
Oil is hanging onto its strong overnight gains as OPEC members were said to be making a final diplomatic push toward securing a deal to cut output.
Oil prices surged nearly 6 per cent on Tuesday, rebounding from an eight-week low on talk that Qatar, Algeria and Venezuela are leading the effort to finalise a deal.
Brent, the global benchmark, was flat at $US46.92 a barrel in Asian afternoon trade.
"We're looking at a combination of short covering and OPEC hopes," said Bill O'Grady, chief market strategist at Confluence Investment Management. "There are great hopes that OPEC will be able to come up with some sort of an agreement before the end of the month; it's in their interest."
OPEC agreed to an outline of a supply cutting deal in September but with two weeks to go before a November 30 meeting, disagreements persist among members and non-OPEC Russia on crucial details.
OPEC secretary-general Mohammed Barkindo will travel to member nations, including Iran and Venezuela, over the next few days to discuss the deal.
"Should an agreement to limit production come through, it will be the first in eight years," Jingyi Pan, market strategist at IG, wrote in a note.
"There remains event risks from US inventory reports in addition to non-OPEC members' stance that could jeopardise the current recovery pace of oilprices," Pan said.
The US industry group, the American Petroleum Institute, after the market closed on Tuesday said crude stocks rose last week.
While the local market is struggling to stay up, just kept afloat by solid gains in the banks, most other regional bourses are posting healthier rises.
Japan's Nikkei is up 1.2 per cent, the Hang Seng in Hong Kong has added 0.6 per cent, Korea's Kospi is up 0.75 per cent, while the Shanghai Composite has slipped 0.2 per cent.
Investors are questioning whether financial markets overreacted to Donald Trump's shock US election victory, which prompted a rout in global bond markets, in many emerging markets but also sparked gains in resource stocks on bets a Trump administration will ramp up public spending, fuelling inflation.
"Things might have got a little bit overdone with the market having got very excited about reflation and what it's going to mean," said Mark Lister, head of private wealth research at Craigs Investment Partners. "Most of the sharp adjustment is behind us now and from here you'll need to see tangible evidence of some of those policy moves."
Embattled online clothing retailer SurfStitch has vowed to rebuild despite forecasting an even sharper decline in operating cash flow because of legal costs.
The company has warned a decline in cash from operations in the 2016-17 financial year is set to blow out from its previous forecast of $6-7 million to $9-10 million.
SurfStitch made a net loss of $155 million in 2015-16 as it invested heavily in business changes and failed to achieve the strong sales growth it pursued.
Aggrieved shareholders lashed out at co-founder Justin Cameron, blaming the former chief executive for the company's woes and a 90 per cent plunge in shareholder value over the last year.
"Mr Cameron ... has gone rogue and disappeared in a puff of smoke," shareholder Andrew McPherson told the annual meeting.
"I believe Mr Cameron's actions very much depict a lack of good faith - if it's shown he had a lack of good faith can he be taken to task personally - can his golden coffers be brought back and shared with rightly disgruntled people?"
Shares are up 2.8 per cent at 18.5 cents today.
The cost of locking in a fixed-rate mortgage could rise thanks to a surge in global bond yields, which has gained momentum after Donald Trump's shock election win.
A handful of smaller Australian lenders have already raised fixed interest rates in recent weeks, and there are predictions more will follow if current trends persist.
Since the US election last week, global investors have placed growing bets the Federal Reserve will raise interest rates sooner, in response to inflation unleashed by Trump's plans for an infrastructure spending spree and and tax cuts, lifting bond yields around the world.
As a result, some experts predict Australian fixed home loan rates may have bottomed, after reaching a record low in recent months.
A key benchmark used by banks when pricing fixed-rate loans, three-year swap rates, have lifted by about 20 basis points to more than 2 per cent since Trump's shock win.
These rates had already been rising since September, but the trend has gained significant momentum in the past week, as markets try to assess the implications of a Trump presidency.
GrainCorp boss Mark Palmquist has moved to temper investor expectations that a bumper crop will deliver easy profits this year after the company's financial performance for 2015-16 came in slightly ahead of expectations.
The $2 billion company reported a 3.7 per cent fall in statutory net profit to $30.9 million in the year ended September 30, which was dragged down by $21.8 million in one-off costs.
Underlying net profit of $52.7 million was 18.4 per cent higher than the prior year and just ahead of the consensus estimate among nine analysts surveyed by Bloomberg of $47.8 million.
The company had given guidance in February for underlying net profit in the range of $40 million to $55 million.
Full-year revenue rose 1.8 per cent to $4.158 billion, just ahead of analysts' average forecast of $4.134 billion.
Mr Palmquist said in the current financial year, to Tuesday, GrainCorp had received about 1.5 million tonnes of grain into its network.
"While this year's larger crop is welcome, harvest is at least three weeks late this year and there is a long way to go before it is all stripped and in the bin," he said in a statement.
"We are expecting a return to a stronger year in 2016-17, driven by larger volumes and the operational efficiencies delivered in storage and logistics over the past two years, partially offset by new port competition.
"Conditions are likely to remain challenging for marketing, with ongoing competition from alternative supply origins, and a global oversupply of grain. These macro factors will continue to impact international grain flows and Australia's competitiveness."
Mr Palmquist said the malt division would perform strongly due to customer demand and the oil division would benefit from improved crush margins "off the back of a larger Australian canola crop, and its expansion projects."
Graincorp shares have gained 7 per cent over the past year and are slightly lower today at $8.58. The moved as high as $9.09 hit in June.
The board declared a final dividend of 3.5¢ to be paid on December 14.
This morning's wages index data was surprisingly bad, but it will only bother the RBA if it translates into lower inflation, write UBS economists.
As an aside, they point out that on this ABS measure, annual wages growth of 1.9 per cent is well below the long-run average of 3.5 per cent.
Here's more:
Overall, wage rates have been showing signs of stabilising – which led the RBA's Statement on Monetary Policy to highlight less concern about labour costs as a key factor for the (bottoming) inflation outlook.
However, the broad-based downside surprise for Q3 WPI – especially the wage bill concept including bonuses – suggests a risk that there could still be some drag on the inflation outlook. However, unless this actually translates to weakness in GDP-basis measures (like average earnings), and consequently to underlying CPI lurching down further from its current 1.5% year-on-year "trough", it probably won't shift the RBA.
Given this, we still don't expect the RBA to cut rates any further.
And here's JP Morgan's Tom Kennedy weighing in:
At first glance the weakness in wage growth may seem odd given that employment growth remains decent and the jobless rate has fallen 0.4 percentage points to 5.6 per cent since January.
However other measures of labour market slack such as the underemployment rate remain elevated, and may prove more instructive in deciphering the outlook for wage growth (see chart). Today's data are consistent with this view and suggest that the demand and composition of labour is still insufficient to generate a material pick-up in wage outcomes.
The magnitude and breadth of today's weak wage data, coupled with ongoing pressure on corporate margins, underscores our view that core inflation is unlikely to move materially higher anytime soon. For this reason, we remain of the view that the RBA still has more work to do in 2017, with officials likely to be increasingly sensitive to any wobbles in the activity data given most of Australia's nominal indicators (CPI, wages, consumer and business inflation expectations) remain weak.
Ray Dalio, founder of the world's largest hedge fund Bridgewater Associates, said President-elect Donald Trump's policies would have a "broadly positive" effect on the US economy and that bond prices likely made a "30-year top".
"There is a good chance that we are at one of those major reversals that last a decade," Dalio said in a LinkedIn post, likening the magnitude of possible changes to the shift from the 1960s period of non-inflationary growth to the 1970s decade of stagflation, or the 1980s shift to disinflationary strong growth.
"We want to be clear that we think that the man's policies will have a big impact on the world. Over the last few days, we have seen very early indications of what a Trump presidency might be like via his progress with appointments and initiatives, as well as other feedback that we are getting from various sources, but clearly it is too early to be confident about any assessments," he wrote.
Donald Trump's stunning victory for the White House wiped out more than $US1 trillion across global bond markets worldwide last week on bets that plans under a Trump administration would boost business investments and spending while firing up inflation.
"Donald Trump is moving forcefully to policies that put the stimulation of traditional domestic manufacturing above all else, that are far more pro-business, that are much more protectionist," Dalio said.
"We believe that we will have a profound president-led ideological shift that is of a magnitude, and in more ways than one, analogous to Ronald Reagan's shift to the right. Of course, all analogies are also different, so I should be clearer.
"Whereas the previous period was characterised by 1) increasing globalisation, free trade, and global connectedness, 2) relatively innocuous fiscal policies, and 3) sluggish domestic growth, low inflation, and falling bond yields, the new period is more likely to be characterised by 1) decreasing globalisation, free trade, and global connectedness, 2) aggressively stimulative fiscal policies, and 3) increased US growth, higher inflation, and rising bond yields."
Wage growth is on fire - in the US, that is.
The Atlanta Fed's wage growth tracker indicates that the median American worker saw her pay rise by 3.9 per cent year-over-year in October, the fastest rate of growth since November 2008.
It's an interesting contrast with this morning's wage price index from the ABS, which pointed to the slowest annual wage growth since the statistician started recording it.
It's a warning that while investors may be getting carried away with what is happening in the US, the downward pressure on inflation in our economy remains and will factor into the RBA's thinking.
The Atlanta Fed's wage metric tracks the incomes of individual workers over time, and as such is not prone to the composition effects — like the exit of higher-paid baby boomers from the labor force — that have weighed on the usual measure of average hourly earnings this cycle.
"Average hourly earnings are more susceptible to compositional and demographic changes in the labour force, while the tracker is comparing the wages of the same individuals over time, providing a unique insight into wage growth," said Bespoke Investment Group macro strategist George Pearkes. "That growth has been strong and accelerating recently despite very modest inflation and some remaining underemployment."
Wage growth among college-educated employees also outstripped the headline figure — something it hasn't done for the most of the past year — demonstrating that wage pressures are broadening to the upper end of the income spectrum, which has been noted by economists like Macquarie Capital Markets' David Doyle
"Today, there is some risk that wage growth is galloping higher as opposed to gradually moving higher," concludes Neil Dutta, head of US economics at Renaissance Macro Research.
Annual growth in Aussie workers' wages has hit a new low of 1.9 per cent, ABS data show, suggesting there is still plenty of slack in the jobs market despite a low unemployment rate of 5.6 per cent.
Seasonally adjusted, private sector wages grew 0.4 per cent and public sector wages grew 0.6 per cent in the September quarter 2016. Through the year, private sector wages continue to grow at a slower pace than the public sector, 1.9 per cent compared to 2.3 per cent, ABS reported.
Annual wage growth is now below 2.5 per cent for all industries. In the September quarter, wage growth ranged from 1.0 per cent for mining to 2.4 per cent for health care and social assistance.
Australian wages rose by 0.4% in the September quarter, to be 1.9% higher over the year. Lowest level since at least 1998 #ausbiz #auspol pic.twitter.com/uqqkYDburl
— Callam Pickering (@CallamPickering) November 16, 2016
Not everyone is convinced the RBA's next move will be a rate hike (see post at 10.13am), in fact Macquarie believes the bank will cut twice in the first half of next year.
The bank's economists have just lowered their economic growth forecasts for the next three year, saying political uncertainty in the wake of the unexpected US election outcome had, if anything, strengthened the case for more RBA easing.
They now expect GDP to grow by 2.1 per cent in 2017 (previously 2.3 per cent), 2.6 per cent in 2018 (3.2 per cent) and 2.7 per cent in 2019 (2.8 per cent) and tip the bank will cut in February and May next year.
"The key impact channel domestically is a further delay to the upswing in business investment we had anticipated in financial year 2018, stemming from the shock to confidence – globally and domestically – and anticipated ripple effects of uncertainty given the number of significant elections through 2017."
The analysts say the US election result had also strengthened their "risk case" that the RBA might have to drag the cash rate as low as 0.5 per cent, especially if the dollar were to remain stubbornly high.
"Confidence in the outlook for China, and commodity prices are likely to support the Australian dollar despite additional RBA easing," they say, adding a rise in the Aussie above $US78¢ would add conviction to their rate cut call.
It's currently trading at US75.49¢, about 2 cents below multi-month peaks hit last week before a rally in the greenback weakened the locla currency.
But the analysts admit a lot would need to go wrong, and a lot would need to be done domestically for the RBA to cut below 1 per cent.
"Below a 1 per cent cash rate the RBA is also likely to employ a combination of other policy tools," they write in a note to clients. "Specifically, to contain the impact of rate cuts and expected population inflows on Sydney house prices, a further tightening, and specific targeting, of macro prudential policy would be likely."
Jeffrey Gundlach, co-founder of bond giant DoubleLine Capital, said the stock market is in for a 'bumpy ride' as expectations are dashed that President-elect Donald Trump can quickly spur growth.
Gundlach, who first predicted the outcome of the election in January, said Trump doesn't have a magic wand to rapidly improve the economy.
He said federal programs take time to roll out, rising mortgage rates and monthly payments aren't positive for the psyche of the middle class, and supporters of defeated Hillary Clinton are not in a mood to spend money.
"Maybe liquor sales will go up," Gundlach said on a webcast. "The Trump win is not positive for consumer spending."
The manager said the same bankers and economists who predicted that a Trump presidency would sink the economy are now saying his growth policies will fuel the stock market.
"We disagree with that," said Gundlach, who urged investors to avoid the FANGs - Facebook, Amazon, Netflix and Google - in particular.
He said Trump won the election mostly because wage growth has been negative since 1973 for median workers while the richest Americans have had huge gains.
"Trump won because people felt abandoned and left behind," he said.
Trump's victory dovetails with Gundlach's long-time allocation toward shorter-duration debt to reduce risk in a rising-rate environment, triggered by higher deficit spending.
Gundlach has said that Trump, who plans to spend up to $US1 trillion on infrastructure improvements, is "bond unfriendly."
BHP Billiton is tipped to increase dividends by more than 60 per cent this financial year as stronger than expected prices for iron ore and coal swell the miner's coffers.
BHP was making a profit margin of more than $US230 on each tonne of coking coal sold at Tuesday's market price of $US308 per tonne, and is making more than $US40 margin on each tonne of iron ore sold at Tuesday's price of $US77 per tonne.
Stronger than expected commodity prices look set to boost free cash flow well above the $US3.4 billion seen in fiscal 2016, and give the BHP board some interesting decisions to make over spending priorities.
While dividends will not return to the heights seen under the "progressive" dividend policy of the past, BHP's new policy introduced in fiscal 2016 gives the board a significant amount of discretion over how much to pay out to shareholders.
The policy requires the board to pay out a minimum of 50 per cent of underlying attributable profit every six months, and then consider whether an additional payout is warranted.
Analysts believe the company will significantly improve on the US30¢ total dividend paid in fiscal 2016, with market consensus according to Factset suggesting a dividend of US49¢.
Individual analyst forecasts are varied and changing quickly with the trajectory of commodity prices; UBS analyst Glyn Lawcock was forecasting a US44¢ dividend for the full year, with US21¢ of that expected to be paid out in February.
Shaw and Partners analyst Peter O'Connor was more cautious, predicting a US38¢ dividend for fiscal 2017, while BT Investment management analyst Brenton Saunders said it could be between US50¢ and US80¢ for the full year.
While dividends may rise, BHP is expected to focus on paying down debt in the immediate future, having been downgraded by Standard & Poors to an A- credit rating in February.
BHP prioritises the strength of its balance sheet over all other spending options, including dividends and new projects, and likes to maintain a credit rating of at least A-.
The surprise rally in coal prices has been caused by a perfect storm of supply cuts in China and multiple supply interruptions in Australia.
A steep drop in metal prices overnight wasn't enough to spoil an early sharemarket rally, as gains in the big banks and energy names more than offset weakness in miners.
The ASX 200 is up 18 points, or 0.3 per cent, at 5344.
The biggest single impetus for the positive start is a 2.2 per cent jump in Wesfarmers, after news broke last night that it was planning the sale of two coal mines.
The big four banks are all higher by between 0.3 and 0.5 per cent, while Telstra shareholders can finally take a breath after some vicious selling in the stock - it's up 1.1 per cent as the post-Trump markets current finally showed signs of ebbing.
Back to the miners, and BHP is down 1.1 per cent, Rio 1.4 per cent, while South32 is actually up 0.4 per cent. Those are much milder moves than overnight trade in their London-listed shares would have suggested would be the case.
Fortescue is off 1.6 per cent. Gold diggers are well up - Newcrest by 3.1 per cent.
Energy is the best performing sector, climbing 2.1 per cent as a group. Beach Energy, Santos and Oil Search are all among the morning's best.
Listed property names are still under pressure, though, with Stockland and Mirvac both lower.
It's not by a lot, but for the first time in two years markets are betting that the Reserve Bank is more likely to lift rates than lower them next year.
Index swaps are pricing in an about 8 per cent chance that over the next 12 months the cash rate will rise from its current record low of 1.5 per cent, according to Credit Suisse data.
The momentous shift in the outlook was prompted by the recent rout in global bond markets where yields spiked over the past week on speculation that stimulus spending by a Trump administration will stoke inflation.
But markets had already been trimming the chances of another rate cut since early August, when the RBA last cut rates.
Since then, a combination of rallying commodity prices, solid economic growth and worryingly high house prices had prompted the central bank to tone down its rhetoric on future easing.
Last night, RBA governor Philip Lowe added to expectations the central bank is done with cutting interest rates.
In a speech in Melbourne, Lowe hinted that he was worried further easing could push already elevated levels of household debt even higher.
"It is unlikely to be in the public interest, given current projections for the economy, to encourage a noticeable rise in household indebtedness, even if doing so might encourage slightly faster consumption growth in the short term," Lowe said.
Citi economist Paul Brennan said the speech showed the central bank is done with cutting interest rates, but added that the first rate rise was also a long way off due to inflation still hovering well below the RBA's target range.
"In particular, even on the bank's relatively optimistic economic forecasts of above trend growth later next year and in 2018, the mid-point of the RBA's inflation forecast is for a rise only to the bottom of the 2-3 per cent target."
Citi doesn't expect the first rate hike to be before mid-2018.
SPONSORED POST
If you want to see a Wall St rally, check out American small caps, writes IG strategist Chris Weston:
US retail sales staged a mighty comeback last night, lifting the broader markets, with all major indexes trading into the green and new highs. The Russell 2000, more representative of the smaller companies end of the US equities, continued a staggering 8 per cent rise over the past 6 days and is eyeing a close at a record 1300 points.
On the back of this the US dollar Index remains king and back over the all-important 100 level as the post-election Trump effect rolls on, with the December rate hike remaining an almost certainty.
So the reversion to the mean, with iron ore settling back 6.5 per cent after a great run may see some profit taking in Australian miners today only offset with oil trading 5.5 per cent higher overnight prior to the coming OPEC meeting. This should have a positive offsetting effect for the energy sector in the Aussie market.
Some good technical levels in the oilers showing up with Woodside holding above $28.00, last close $29.07, and Santos firmly above $3.80.
Watch the Aussie dollar today with RBA Governor Dr Phillip Lowe stating of the three things they worry about the most, a black swan event in China tops the list, but also stated it was unlikely. From the RBA comments that housing is "complicated" and the statement that interest rates may have seen the lows, the immediate roll on effect was 10Y Aussie Bonds moved to yield 2.65 per cent while the AUD cross remains around US75.5c. This currency cross is worth watching as a move away from these levels will provide some great volatility opportunities for traders.
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