Looks like some short sellers in Mayne Pharma are getting burnt.
The stock is up another 4.1 per cent at $1.39, taking the two-day gains close to 10 per cent.
Mayne shares have been heavily shorted, with nearly 10 per cent of the outstanding stock held by short sellers, ever since the generic drug maker late last year first was investigated by the US Department of Justice over the marketing and sales of its products and then became the target of a US price fixing lawsuit.
Mayne Pharma argued the legal proceedings would not have a material impact on future earnings, but the shorters obviously disagree.
A look next door: Moody's has upgraded its credit outlook on Indonesia to "positive" from "stable", praising its progress on reforms and its efforts to keep finances under control despite falling prices for its main commodity exports.
Moody's upgrade follows a similar move by Fitch in December, and comes at a welcome time for Indonesia's policymakers as they seek to attract and retain more foreign investment as emerging market assets globally come under stress.
Indonesia's rupiah currency and its main stock index edged up in early trade.
Outlook upgrades typically mean a country is closer to a ratings upgrade, which would allow it to sell government bonds at lower rates and attract more foreign investors.
ANZ head of Asian research Khoon Goh said he wasn't surprised by the decision.
"Indonesia's greatly improved resilience was put to the test in Q4 2016 amid the global bond selloff and the Trump tantrum," Goh said. "Outflows from the Indonesian bond market was short-lived, and inflows resumed in December-January totalling USD2.2bn, even as other Asian markets continued to see outflows."
Moody's reaffirmed its rating of Baa3 for Indonesia, its lowest notch for investment grade debt, while noting it is now less vulnerable to external shocks and has a lengthening track record of economic stability and fiscal discipline.
Donald Trump's honeymoon with investors may come to a premature end, as his frequent Twitter outbursts help kill off the initial burst of euphoria, according to Herald Van Der Linde, HSBC's head of equity strategy for the Asia-Pacific region.
While leaders such as Japan's Prime Minister Shinzo Abe and India's Narendra Modi enjoyed comparatively lengthy periods of market strength after taking office, the US optimism that welcomed Trump's surprise victory in November shows signs of fizzling less than a month into his four-year term.
"The expectations of the markets seem to be higher than what, very often, politicians can promise," Van Der Linde told Bloomberg. With regard to Trump, "the reality check might come sooner," he said.
That's "maybe because we see part of the internal workings of what happens in the White House on Twitter - so we see some of the struggles that go on coming on the Twitter feed."
With Trump, the "reality check might come sooner as some of the policies - the travel ban etc - is more difficult to implement than the markets anticipated, or the Trump administration anticipated."
The S&P 500 Index has edged up 1 per cent since Trump's January 20 inauguration, paling in comparison with the 4.6 per cent surge it experienced from the November 8 election through to the end of the year.
The index's advance has slowed as Trump stumbled out of the gate with a flurry of executive orders including a travel ban on immigrants from seven countries that has been suspended by a Seattle judge.
The local ASX200 is flat since the inauguration and down 0.3 per cent in 2017, but has still gained more than 7 per cent since the US election.
Iron ore futures in China are trading higher again, rising for six out of eight sessions, with values underpinned by a weaker US dollar and signs of strong demand in world's top steel consumer China.
Resumption of construction activity after the Lunar New Year break is boosting demand for steel and other raw materials, analysts said.
"On Tuesday and Wednesday we saw iron ore transactions in the spot market as buyers are restocking after the holidays," said Wang Di, an analyst at CRU consultancy in Beijing. "Another reason could be weakness in the US dollar."
Investors in the iron ore market expect economic data in the coming weeks to show the world's second-largest economy got off to a good start in 2017.
Steady growth is giving the central bank room to slowly tighten monetary policy and contain the risks from high levels of debt. The market will seek further direction from trade data due on Friday.
Iron ore on the Dalian Commodity Exchange is up 1.7 per cent at 646.5 yuan ($US94.12), while the most-active rebar contract on the Shanghai Futures Exchange was up 1.1 per cent at 3234 yuan.
The spot price for iron ore gained 0.3 per cent to $US83.53 on Wednesday night.
China's foreign exchange regulator said on Wednesday that risks from cross-border capital flows will be generally under control in 2017, a day after the country reported that its forex reserves had fallen to near six-year lows.
Chinese authorities have taken a raft of steps in recent months to curb capital flight from the country to support its weakening yuan currency, while trying to bring in more foreign investment.
Households, particularly those in Queensland and Western Australia, will see some benefits from the lift in commodity prices, HSBC says.
A marked and largely unexpected lift in commodity prices, particularly of iron ore and coal, has lifted Australia's export revenues, pushing the trade surplus to its most positive position on record.
But some economists have argued the impact on households is likely to be subdued, given continuing weaknesses in the consumer economy.
Any lift to households would be "less potent than we've seen in recent cycles," HSBC chief economist Paul Bloxham said. "But we still think there will be some effect."
Households will gain some benefit from the rising fortunes of mining companies through two mechanisms, Bloxham said.
State governments, particularly in the mining-rich states of Western Australian and Queensland, will see a lift in state royalties, which will, in part, flow through to government spending and public sector wages. And the higher profits of mining companies themselves will provide a private-sector boost, flowing through to wages and spending.
"The key point here is we've had this long period where the resources sector has been a headwind to growth," Bloxham said. "That's been most vivid in WA and Queensland."
"That headwind has turned into a tailwind. It should start to support conditions in those two states that have been under a fair bit of pressure recently."
Australian apartment developers are ramping up vendor financing for foreign buyers, in an effort to fill the funding gap left by major Australian banks.
Melbourne developer Beulah International, Sydney's Eklipse Capital, and Brisbane's Golden State Property Developments are the latest developers to offer financing to foreign buyers, particularly Chinese buyers when they acquire their apartments.
Foreign buyers have been still struggling to get funding since the major banks stopped foreign loans last year, resulting in the number of buyers falling up to 50 per cent in the past 12 months, real estate agents said.
More vendor financing will also be welcome relief for many would-be investors in the apartment market after CBA, the nation's biggest property lender, announced it will indefinitely suspend new finance applications for some investment home loans on Wednesday.
Melbourne's Beulah is offering a facility, through the use of licensed brokers, to provide long term loans to foreign buyers. The loans will be sourced from the developer's balance sheet and other private high net worth backers including those from overseas.
While the developer was still finalising details of its loans, it said it would charge interest rates of around 6 per cent to 7 per cent.
Gold was the biggest income driver for Australia in 2016, surpassing even iron ore, CommSec notes.
Gold exports rose by 30 per cent in 2016, adding $4.4 billion to export receipts, while iron ore exports rose by 8.4 per cent over the year, adding $4.1 billion to Australia's foreign revenue, chief economist Craig James said.
"Australian gold exporters remain amongst the most efficient in the world and the challenge remains to keep production costs down to support margins and profitability," he said.
The All Ordinaries gold index has risen more than 40 per cent from recent lows in mid-December.
Spot gold is hovering just below three-month highs of $US1244 an ounce the precious metal hit overnight.
Political uncertainty around the French elections and Greek debt crisis, as well as controversy over US President Donald Trump's temporary travel ban on people from seven Muslim-majority countries have recently boosted gold as a safe-haven asset.
"Perhaps the most important factor however, is the complete lack of any coherent economic policy from the new US administration," says OANDA managing director Illka Gobius. "This has taken the wind out of the post-election Trump-flationista's."
Casino giant Crown will expand its Southbank site to eight hectares after it won approval from the Andrews government to build a $1.75 billion 90-storey tower.
Once completed it will be Melbourne's tallest building, at 322 metres, exceeding Eureka Tower by 25 metres.
The 1 Queensbridge Street site will be home to a 6-star hotel with 388 rooms and 708 apartments.
Premier Daniel Andrews said the project was of "state significance" because it would create 4000 jobs; 3000 during construction and another 1000 once up and running.
"It's not just about height though, the quality of this design outcome, particularly the public realm benefits that will be accessible for all Victorians, really mark this out as a very, very special project," Mr Andrews said.
Planning Minister Richard Wynne gave approval to the project – which is claimed to represent $2.1 billion in economic benefit - after 12 months of talks with the developer and Melbourne City Council.
"This process has been careful, it has been considered," Mr Andrews said.
As part of the deal Crown and developer Schiavello group will pay $100 million towards a community package that will see a $25 million upgrade of Queensbridge square, and $15 million towards Sandridge rail bridge.
The Premier said the old rail bridge could be re-imagined to be similar to the famous High Line in New York City.
Construction on the 5060 square metre site is hoped to begin as soon as 2018 and will take up to six years to complete.
There will be no gaming at the new site, which will be connected to the casino complex by a footbridge over Queensbridge Street.
Crown shares are up a touch at $11.23.
The sharemarket has just been jolted out of its midday slumber, possibly due to a de-escalatory move by US President Donald Trump.
The ASX jumped 20 points and US futures trimmed losses within minutes of wires reporting that Trump sent a letter to China's President Xi Jinping saying he looked forward to working with him "to develop a constructive relationship" that benefits both countries, the White House said in a statement.
The letter also thanked Xi for his congratulatory letter on Trump's inauguration and wished the Chinese people a prosperous Year of the Rooster, the statement said.
The letter is the first direct communication from Trump to Xi since he moved into the White House on January 20. Trump still hasn't set up a call with Xi since then despite speaking on the phone with more than a dozen world leaders.
Trump is under pressure to take some sort of action against China after criticising the nation repeatedly over trade on the campaign trail. In tweets since his election win, Trump has questioned the One-China policy and criticised China's leaders for failing to do more against North Korea.
Just last week, he again accused China of manipulating its currency.
China is likely to feel less pain than other major economies if US President Donald Trump achieves his goal of pushing the US dollar lower, while Europe, Japan and the emerging markets will pay a far higher price, according to top Goldman Sachs economists.
Andrew Tilton, Goldman Sachs' chief Asia-Pacific economist said it was difficult to know whether the Trump administration would be persistent in pushing for a weaker US dollar, particularly since some of its policies - including fiscal stimulus and possible tariffs - were likely to result in the currency strengthening.
But, he said in an interview with the AFR, a weaker US dollar would likely prove "very difficult for Japan".
"It's very hard to see how the Bank of Japan could hope to get inflation back to the 2 per cent level with a stronger currency, particularly since Japan is struggling with this prolonged low inflation - and, for many years, deflation - and it has already done a very large amount of monetary easing and pushed the yield curve down to essentially zero."
In contrast, he said there was some alignment between the Trump administration and Beijing because "China would also like a weak dollar."
According to Tilton, "at the moment, growth in China is pretty good and inflation pressure looks like it is shifting a bit to the upside.
"So in the very short term, having a slightly stronger currency might not be something the Chinese authorities would mind because it might reduce inflationary pressure at the margin, and also discourage capital outflow, which has been a persistent concern."
But, he noted, "having said that, given falling potential growth in China and the likelihood of ongoing growth challenges over the next few years, I don't think China wants to see a sustained appreciation in its currency."
Tilton said that one reason Beijing is battling large capital outflows is that Chinese businesses and consumers expect that the Chinese currency will depreciate further, particularly versus the US dollar.
"Onshore Chinese residents are used to thinking about their currency in comparison with the US dollar.
A Canadian investment and insurance company has agreed to buy New Zealand insurer Tower for $NZ197 million ($186.8 million) in cash.
Fairfax Financial Holdings [Eds: No relation to the esteemed publisher of this blog] has offered NZ$1.17 a share for Tower, 48 per cent more than Tower's closing price on Wednesday, the companies said in a statement to the New Zealand stock exchange Thursday.
Tower's ASX- and NZ-listed stocks have surged by more than 40 per cent to $1.07 and $NZ1.12, respectively.
Tower's board has unanimously approved the offer, and two of the company's major shareholders, who hold 18 per cent of the shares, have agreed to vote in favour of the deal
The Canadian firm run by Prem Watsa is known for making acquisitions. It agreed in October to buy commercial and consumer units from AIG in nations including Argentina and Turkey. In December, Watsa struck one of his biggest deals ever,the $US4.9 billion buyout of Allied World Assurance Co.
Like value investor Warren Buffett, Watsa uses insurance premiums to invest in other industries. Fairfax controls one ofthe biggest stakes in BlackBerry and profited in the US financial crisis by using derivatives to bet against the creditworthiness of US banks and insurers.
Gold is hanging onto most of its strong overnight gains, but interestingly gold stocks are floundering today
The yellow metal's spot price is down 0.2 per cent at around $US1240 an ounce, just below a three-month high of $US1244 it hit overnight, while the All Ords gold index has slipped 0.2 per cent, on track for a second day in the red.
It might just be that investors are taking a breather from a rally that has seen gold stocks soar more than 40 per cent since mid-December.
Investors say the gold price will remain supported by lingering political uncertainty around the Trump administration as well as looming European elections.
"There's underlying demand for gold as a hedge against political uncertainties on both sides of the Atlantic," said Ole Hanson, head of commodity strategy at Saxo Bank. "Retracements have been quite shallow the past couple of weeks, especially the signal that gold wasn't going down when the dollar started going up," he added.
Rio Tinto's surprise move to start a share buyback and reward investors with a bigger-than-expected dividend of $US3.1 billion has laid down a marker to mining rivals benefiting from higher commodity prices.
BHP Billiton, Anglo American and Glencore will publish results later this month. Like Rio, which late yesterday reported its first profit increase since 2013, they're expected to see a rise in profits thanks to higher iron ore, coal, zinc and nickel prices.
"All three are likely to follow Rio's steps of increasing returns to shareholders in some fashion," said Jeremy Sussman, an analyst at Clarksons Platou Securities. "Once one of the majors starts on this path, we typically see others follow. Glencore actually began this trend in the fourth quarter by reinstating its dividend, though Rio took it to another level today."
But if investors liked Rio's cash splash, they're not showing it in today's trade, with the stock down 0.7 per cent at $65.25. The stock initially rallied as much as 3.5 per cent in London overnight, but closed 1.7 per cent lower as traders digested the results.
The top producers are emerging from a crippling downturn that forced them to cut costs, sell shares and under-performing assets and in some cases scrap dividends to repair debt-laden balance sheets. The speed of the industry's turnaround that enabled Rio to return surplus cash to investors has surprised market analysts and mining executives alike.
Sales of new homes in edged higher in December, a solid result given it built upon a sharp rebound the month before.
The Housing Industry Association said its survey of large-volume builders showed new home sales rose a seasonally adjusted 0.2 per cent in December from November, when they jumped 6.1 per cent.
Sales of houses dipped 1.6 per cent, while apartment sales climbed 6.4 per cent.
New home sales hit a two year low in October last year, but recovered well in November and December, the HIA said, adding the late 2016 results were strong for the sales of 'multi-units', while detached house sales remained in "reasonable shape".
"The strong finish to 2016 for new home sales admittedly follows a very weak month in October," said HIA chief economist Harley Dale. "Obviously it is better that new home sales bounced back rather than kept falling.
"The overall profile for both HIA new home sales and ABS building approvals is consistent with the first stage of the down cycle in new home commencements being a mild one. We expect this down cycle to begin in 2017."
In the next case of twitchy tweet fingers, President Donald Trump blasted department store chain Nordstrom for dropping his daughter Ivanka's clothing line, prompting critics to accuse him of misusing public office to benefit his family's sprawling business empire.
After Trump's highly unusual move to use a White House platform to intervene in a commercial matter involving his daughter, Nordstrom reiterated that its action last week was based on declining sales of the Ivanka Trump products. But White House spokesman Sean Spicer characterised the move as a "direct attack" on the president's policies.
My daughter Ivanka has been treated so unfairly by @Nordstrom. She is a great person -- always pushing me to do the right thing! Terrible!
— Donald J. Trump (@realDonaldTrump) February 8, 2017
Somewhat surprisingly, on a day when the S&P 500 Index was flat, Nordstrom shares enjoyed a fantastic rally, closing 4 per cent higher after initially dipping on the President's tweet. TJX, whose T.J. Maxx and Marshalls chains removed Ivanka displays, also posted strong gains. It seems, investors have taken the view that a chiding from Trump will turn shopping into an act of profitable protest.
Thank you #TJMax and #Nordstrom for taking a stand and standing with the majority of your shoppers! My 2 new favorite places to shop :)
— Cailin O'Connor (@CailinEOC) February 8, 2017
"This is misuse of public office for private gains," said Richard Painter, who served as Republican president George W. Bush's chief ethics lawyer. "And it is abuse of power because the official message is clear - Nordstrom is persona non grata with the administration."
The wealthy New York real estate developer who became president on January 20 has declined to sell off his businesses despite demands from critics that he do so to avoid thorny conflicts of interest.
Trump on January 11 said he would maintain ownership of his global business empire but hand off control to his two oldest sons during his presidency. Trump's web of international companies remains a bit opaque since he has refused to release his tax returns, which experts have said would provide a clearer view of his business interests.
Ethics experts have said Trump's arrangement does little to address potential conflicts because he would still know what assets he owned, such as Trump-branded golf courses and hotels, and his family would continue to profit from them.
Nordstrom said it informed Ivanka Trump about its decision in early January.
"Over the past year, and particularly in the last half of 2016, sales of the brand have steadily declined to the point where it didn't make good business sense for us to continue with the line for now," the retailer said.
Some retailers continue to carry Ivanka Trump products but others have backed away. The move by the retailers comes amid an ongoing campaign called #GrabYourWallet, which encourages shoppers to boycott products with ties to President Trump, his family and his donors. Usage of the hashtag on Twitter rose dramatically on Wednesday.
Since winning the presidential election on November 8, Trump has castigated specific companies on Twitter but this was his first tweet involving a business tied to his family since the victory.
Shares have shaken off another downbeat overseas lead, helped along by well received trading updates from AMP and AGL.
The ASX 200 is 13 points or 0.2 per cent higher at 5665, with gains in the big banks providing the backbone for the morning's rise. NAB is the best of the Big Four, up 0.9 per cent, while Westpac is up 0.6 per cent, ANZ 0.2 per cent and CBA a modest 0.1 per cent.
Suncorp is up 1.1 per cent following its profits report, while AMP is up 3.2 per cent and AGL 2.1 per cent after providing their own updates to the market - both of which involved bigger shareholder returns.
Miners are dragging on a broadly higher market. Rio is down 0.7 per cent despite what looked like a pretty decent report, and BHP is off 1.3 per cent and South32 1.5 per cent. The exception once again are gold producers, that continue to enjoy the renewed investor appetite for the precious metal.
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Markets are poised and ready to jump - but which way? asks IG analyst Gary Burton:
Our [Aussie equity] benchmark has traded in a 3.6 per cent range for the past 40 days. These types of consolidations usually end badly for one side of the market, the short sellers forced to close positions if the market breaks higher and the long positions forced out if the market moves lower.
Rio reported in London earnings per share of $5.38, with 320 million tonnes of iron ore shipped and 580,000 tonnes of copper produced, which China soaked up into the expanding infrastructure programs. It is interesting to note that Rio has worked to offload the coal assets but retained the iron ore as the keeper, and are willing to expend this area of the business. A share buyback and dividend increase failed to impress the market.
Analysts believe Rio Tinto is entering a phase of strong returns to shareholders, in a turnaround from the dividend cuts announced across the big end of the mining sector just a year ago.
Rio easily beat expectations for its full-year dividend to be about $US1.33 yesterday after the market closed, when it announced a $US1.70 fully franked dividend and a $US500 million share buyback.
The strong payout was enabled by a sharp reduction in the miner's debt levels, and when asked whether he believed Rio was entering an era of strong returns, Clive Burstow from Barings Asset Management's London-based Global Resources Fund said; "Yes, I do actually."
"They obviously have confidence in the business over the next three years, the CEO said on the call we have confidence over our growth expenditure, I would expect therefore there to be a good period of returns to shareholders on the back of that," he said.
"Obviously the unknown in all of that is what commodity prices will do, but if you accept that commodity prices are in a reasonably well supported phase fundamentally, then yes I think as a shareholder you can expect to see some reasonable returns to your account.
Analysts are also fuelling expectations that Rio could pay out even higher dividends, with most saying there was still upside for next year despite more being spent on shareholder returns on Wednesday than had been expected.
But not all Rio shareholders agree; Craig Evans from Tribeca Investment Partners's Sydney-based Global Natural Resources fund said he was more focused on growth rather than dividends, but there were upsides from the latter.
"We don't necessarily need the dividend, we would love to see them investing in some growth, but we are very aware that a strong dividend adds value to the share price to keep the more yield-hungry investors happy," he said.
The New Zealand dollar tumbled after the Reserve Bank adopted a bias for holding interest rates steady through 2019, and also said it wanted the currency to weaken.
The Australian dollar rose 0.7 per cent to $NZ1.0521 after the RBNZ policy statement was released at 7am AEDT. The Kiwi lost ground against the US dollar too, falling 0.6 per cent to 72.59 US cents.
It wasn't until the last sentence in the policy statement where the central bank signalled a shift: "Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly."
In an accompanying table, the bank forecast the official cash rate will hold at 1.8 per cent (1.75 per cent rounded up) through June 2019, edging to 1.9 per cent in September 2019 and to 2 per cent in March 2020.
"The outlook for the OCR is more dovish than the market had expected," NAB director of economics David de Garis said in a note. "The market had been priced for 1½ hikes from the RBNZ over the next 12 months, but this morning's RBNZ OCR track has it steady not only through this year and next and not hiking until 2019.
"As a dampener on the inflation outlook, the RBNZ said that the NZD remains higher than sustainable for balanced growth, endeavouring to talk it down in the process," de Garis added.
"Admittedly, Wheeler's jawboning lacks teeth (pardon the pun) without an OCR track to back his easing bias up," RBC Capital Markets currency strategist Michael Turner said. "But as the housing market slows and takes headline growth with it, we see room for further easing. We continue to pencil in May."
Suncorp, the country's second-largest general insurer by market share, says it is considering "strategic alternatives" for its life insurance division after reporting a 1.3 per cent rise in half-yearly net profit.
The options for the life insurance division could include a sale or partnership arrangement, but no process has been started, a Suncorp spokeswoman said.
Suncorp reported a net profit after tax of $537 million for the six months ended December 31, up from $530 million a year earlier, after top-line growth of 4.3 per cent. It forecast margins would grow in the second half and raised its fully-franked interim dividend by 10 per cent to $0.33 a share.
The Brisbane-based company said earnings from its life insurance division, which has around a 5 per cent share of the Australian market, fell 52 per cent to $11 million in the first half.
Australia's life insurers have faced rising claims rates and more policy cancellations since Australian media in March last year revealed the use of discredited methods to refuse legitimate claims for insurance payouts.
ANZ is considering the sale of its life insurance and wealth division, with a book value of $4.5 billion, while NAB last year sold 80 per cent of its life insurance unit to Japan's Nippon Life for $2.5 billion.
Australia is an attractive market for foreign insurers because the population and economy are growing more quickly than in most other developed markets and the regulatory regime is more stable than in emerging markets, analysts say.
Suncorp's results were hit by natural hazard claims costs in Australia and New Zealand of $319 million for the first half, $19 million above its natural hazard allowance.
That includes the impact of a deadly earthquake in New Zealand in November, as well as damage from storms in southern Australia in November and December.
Suncorp, whose brands include AAMI, GIO, Shannons, Vero and Apia, has surpassed its natural disaster budget at every half-year result since 2013.
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