That's all for today - thanks everyone for reading this blog and posting your comments.
We'll be back tomorrow from 9am, on the first day of autumn, and without earnings.
Have a good evening.
Shares looked set to break their three-day losing streak, even if only just, before a sharp fall at the close betrayed some worries ahead of Trump's State of the Union address tomorrow and consigned the ASX 200 to a 12-point loss to 5712.
The big move on the final day of reporting season was the 32 per cent jump in WorleyParsons shares as news emerged that a Dubai-based investors had taken a big stake in the business. Profit results from Orocobre, Spotless and Resolute Mining were poorly received, although the last may have been more a result of some heavy selling in gold miners.
Speaking of which, Newcrest was the biggest weight on the index as it dropped 4 per cent. If investors are worried ahead of Trump tomorrow, they weren't buying gold miners to hedge the risk. Perhaps it was expectations of some big tax cut or fiscal stimulus announcement that will push the odds of a US rate hike even higher.
The big miners and banks were mixed, which robbed the index of any solid upward momentum. Energy stocks climbed off the back of higher oil prices, while utilities were the only other sector in the green as more stocks ended the session lower than higher.
Despite the recent softness, for the month the ASX 200 clocked a gain of 1.6 per cent, mostly thanks to gains in the big banks, Wesfarmers, CSL and indeed most bluechips, aside from BHP and Telstra.
Bellamy's shares have come out of a trading halt, rising 4.2 per cent to $4.45 following the company's extraordinary shareholder meeting.
Shareholders voted to remove existing directors Michael Wadley and Charles Sitch at the meeting.
Rodd Peters and Chan Wai-Chan from rebel shareholder group Black Prince were elected as directors, but former Bellamy's director Jan Cameron, head of the rebels, lost her bid to get a seat on the board.
Chairman Rob Woolley resigned earlier along with another board member Launa Inman.
Foreign holdings of Australian government bonds (excluding short-term debt) continued to ease late last year, ANZ notes.
Foreign holdings as a proportion of market value outstanding declined to 55 per cent in the fourth quarter, from 57.7 per cent in thr previous quarter, the lowest level since Q1 2007 and well down from the peak of 78.3 per cent in Q1 2012.
Falling valuations were partly responsible for the fall, reducing the size of foreign holdings by $14.9 billion in the quarter, the largest fall since 2009, ANZ says.
"Non-resident net purchases of bonds provided some offset, increasing by $2.2 billion, which is broadly consistent with the slower pace of purchases in 2016," the bank's economists say.
"Looking ahead, we expect foreign purchases are unlikely to keep up with supply and non-resident holdings should continue to decline as a percentage of the overall stock of ACGBs."
Donald Trump's speech to Congress needs to match market expectations, otherwise investors risk a rude awakening, Mohamed El-Erian writes:
At 1pm tomorrow (Tuesday night, Washington time), Donald Trump will head to Capitol Hill to deliver an address to both houses of Congress.
Given the range of reactions to Mr Trump's first month in office, this speech is one that will be closely watched and analysed, in the US and abroad. It will also be of interest to stock markets that, since Mr Trump's election, have had a record-breaking run decoupled from the fluidity dominating the political landscape.
Markets are likely to continue to feel comfortable qualifying Mr Trump's views on past economic developments. However, as policy details matter a great deal, they will pay close attention to any clarifications he provides on his legislative agenda, as well as on how he will handle negotiations with America's trading partners.
Indeed, notwithstanding what have been limited details up to now, markets have already reflected certain expectations in a range of asset prices.
Given that Mr Trump said in his last press conference that his administration had "inherited a mess", most market participants anticipate a rather downbeat assessment of economic conditions.
But that is not what they have priced in. Instead, encouraged by better than expected data releases in Europe and the US, they are factoring in rising global growth and inflation, with the US contributing more as its own growth rate rises above 2 per cent and inflation settles at about the Federal Reserve's target of 2 per cent.
This is not to say that markets have declared the "all-clear" on the economy. Like the President, there are concerns about sluggish wage growth, a stubbornly low labour participation rate, excessive inequality and low productivity as well as uncertainty about what robotisation and other technological changes imply for the future of work and remuneration distribution.
The persistence of structural headwinds that hold back growth is one of the reasons markets will be looking for information on the implementation of the three main pro-growth themes of the Trump administration: tax reform, deregulation and infrastructure.
The content and timing of specific policy measures will influence the overall level of markets, as well as the composition of gainers and losers among sectors and companies.
The Australian dollar is treading water, as financial markets await a speech by US President Donald Trump in which he may put more meat on the bones of his fiscal and tax policies.
Markets have been longing for more detail on Trump's promised stimulus plans to judge if they really would lift inflation and economic growth, and thus add to the case for higher US interest rates.
Such an outcome would tend to boost the US dollar across the board, including against the Australian dollar. The uncertainty left the Aussie stuck at US76.81¢, well within its recent tight range and capped below US78¢.
"If anyone can make AUD break out of range, it is likely Trump," said Matt Simpson, senior analyst at ThinkMarkets in Melbourne.
"All eyes are on his speech as traders eagerly await clarity over his "phenomenal" tax plan and fiscal spending. Failure to live up to his own hype could result in a nasty bump for stocks, the US dollar and risk sentiment in general."
Traders are also awaiting gross domestic product data due tomorrow, expected to show growth rebounded by around 0.8 per cent in the fourth quarter following a shock contraction in the previous quarter.
Official data today showed Australia boasted its smallest current account deficit in 15 years, driven by booming resource exports.
"The rise in commodity prices is also providing a boost to the public coffers courtesy of higher company tax receipts and a lift in royalties," said Gareth Aird, economist at Commonwealth Bank.
"Nominal GDP is set to post a solid lift as the fruits of rising commodity prices are reflected in higher income growth. We have forecast a quarterly increase of 3.0 percent which would take annual growth to its strongest pace in five years."
It's a fine day for energy stocks, but a dismal one for the gold sector.
The energy sub-index is up nearly 2 per cent, on track for its best day since mid-December thanks to a big rally in WorleyParsons and gains in the oil price.
Benchmark Brent crude has been trading in a tight range between $US54 and $US57 a barrel this year, but is up 0.3 per cent at $US56.11 today, underpinned by high compliance with OPEC's production cuts even as the market remains anchored by rising US production.
Apart form Worley's 31 per cent rally, Santos is the biggest gainer in the energy sector, rising 1.9 per cent. All the other six stocks in the index are in the black too, with Origin gaining 1.7 per cent.
Meanwhile, the All Ordinaries gold index has slumped more than 5 per cent, putting it on track for its worst day since mid-December.
It's a fairly outsized reaction for a marginal slip in the gold price to $US1252 an ounce, slightly below a 3-1/2- month high of $US1263 it struck in the previous session, but gold stocks have been among the biggest winners this year.
Happily for long-suffering WorleyParsons shareholders – who just last week saw the stock price plunge following the company's half year results, when chief executive Andrew Wood delivered an ugly guidance miss – Worley shares jumped almost 30 per cent today after Dubai's Dar Group swooped on a 13 per cent stake and confirmed it made a $2.9 billion takeover offer late last year.
But that won't prevent investors asking some very pointed questions of the board, which is chaired by former chief executive and former Rich 200 member, John Grill, who owns a stake of 10 per cent in the firm, the AFR's James Thomson writes:
The company's decision not to disclose the takeover may be examined by the ASX; if the market regulator asked Crown Resorts why it took two days to confirm speculation about the departure of its CEO, it will surely pop the question to Worley as to why it didn't feel the takeover offer should have been disclosed to the market.
Worley is protected by the carve-out in the ASX listing rules that mean incomplete proposals do not need to be disclosed to the market; Worley described the offer as "highly conditional in relation to financing, due diligence, process, regulatory and other conditions which created significant execution risk and uncertainty for the company".
However, other companies have disclosed equally conditional proposals in the past, such as Treasury Wine Estates and SAI Global. It does feel like something of a crapshoot as to when these offers get disclosed and when they don't.
And the fact is that most investors have been trading in shares – which fell as low as $7.94 last Friday – without the knowledge that a party was in the wings prepared to pay much more for the stock. Disclosure carve-outs aside, that doesn't seem quite right.
Consensus estimates predict the economy grew 0.8 per cent last quarter and 2 per cent over the year, but after today's data NAB reckons the numbers could well surprise on the upside.
Government spending figures were much better than expected in the quarter, increasing 1.5 per cent and set to contribute around 0.3 percentage points to GDP growth, NAB says.
The net export contribution to GDP was as expected and is due to add 0.2 per centage points to GDP growth, but eh bank's economists point out there was also a 0.2 per centage point upward revision to last quarter's contribution which could lead to an upward revision of last quarter's GDP.
"A mechanical calculation of the partial data to date on the expenditure-side could produce a GDP print as high as 1.2 per cent q/q, so risks are tilted to the upside with a further kick from the farm sector possible after a bumper grain harvest," says NAB, which is predicting 0.9 per cent quarterly growth.
CBA expects quarterly growth to come in at 0.7 per cent, showing that the September quarter's weather-related shock contraction was a temporary aberration.
The economists say tomorrow's data is likely to show:
- a moderate increase in household consumption, supported by accommodative monetary policy, modest employment growth and discounting in the retail space
- a lift in residential construction after the QIII weather‑related fall
- a positive contribution to growth from public investment and farm output
- a decline in business investment driven by a fall in mining‑related engineering construction partially offset by a lift in non‑mining capex
- a small positive contribution to growth from net exports following a decent rise in export volumes and more modest lift in imports
Mortgage industry entrepreneur and former host of the Australian version of The Celebrity Apprentice, Mark Bouris, has avoided having to fire himself after Yellow Brick Road earned a maiden profit yesterday.
Bouris told The AFR's Chanticleer column in October last year he would fire himself if he did not make a profit this financial year.
He was supremely confident at the time that YBR's push into wealth management and its above system growth in mortgage lending would bring the business into the black.
"I am pretty pleased with this profit because it shows the strategy is working," he said.
The founder and largest shareholder in YBR said the secret to the $393,000 profit for the six months to December was a 20 per cent increase in mortgage lending and a sharp rise in earnings from wealth management.
Bouris said the bulk of this increase in mortgage loan settlements over the six-month period was residential lending through the YBR network of mortgage brokers. YBR's loan book now totals $41 billion.
The embedded value of the underlying mortgage loan book, which is capitalised on the company's balance sheet, is now $46 million, or 16.4¢ a share. YBR shares closed on Monday at 15¢ each and were unchanged this morning.
The stock suffers from a relatively small level of free float because Bouris owns 18.21 per cent, Macquarie Group owns 18.14 per cent and Nine Entertainment Corp owns 17.6 per cent.
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A fall in business lending is to blame for slowing credit growth in January, latest RBA data shows, while stable housing credit growth masked continuing outperformance in the investor segment.
Total private credit grew by 0.2 per cent in January, down from 0.7 per cent in December, and by 5.4 per cent over the year.
Business lending contracted 0.3 per cent over the month, with ANZ economists noting it "perhaps reflects an element of payback" after a particularly strong December number, where biz lending grew at the fastest pace since the GFC.
"Nonetheless, it is a soft result, and we would have expected growth to continue given the improvement in business conditions and profitability in recent months," the ANZ team write.
"We expect this weakness in credit growth will be only temporary, supported by the ongoing pickup in business loan approvals, and the improved CAPEX outlook for the remainder of 2016-17 reported last week."
On an annual basis, business credit grew by 4.7 per cent, a growth rate which CBA economist Michael Workman labelled "very modest, indicating the debt averse attitude of the corporate sector".
"Stronger growth is unlikely until corporates believe their high hurdle rates for investment returns can be met," Workman said.
Housing credit continued to expand at a solid pace, expanding at a rate of 0.5 per cent over January and by 6.4 per cent annually.
ANZ economists said the increase "was to be expected, given recent strength in house prices and auction results".
"These factors suggest that housing credit will continue to expand at a steady rate in coming months."
Of note to economists is that it is the fifth consecutive month in which investor segment growth - at 0.6 per cent for the month - has outpaced the owner-occupier segment, which expanded at a rate of 0.5 per cent. The annual growth in investor lending nudged higher to 6.6 per cent, and owner-occupier to 6.3 per cent.
While investor credit "is still well below APRA's 10 per cent speed limit, the regulator will likely be watching this space closely," the ANZ economists note.
Overall annual housing credit growth of 6.4 per cent is well below the 7.4 per cent rate this time last year, CBA's Workman points out. But he also notes that "firmer housing investor credit annual growth may interest the RBA and APRA given their concerns about financial stability".
QBE and Seven bosses have learned work romance comes at a price, writes BusinessDay columnist Elizabeth Knight:
It's hard to believe that there aren't plenty of executives around town sweating a little more profusely this week as they delete their text messages and rethink the merits of any secret romantic trysts with their staff.
Twenty years ago the office affair was not especially frowned on. But today this behaviour can trash reputations, shred careers or, in the case of two recent high profile affairs, cost the executive a lot of money.
For the company it's now a public relations disaster, requiring specialist spin doctors to manage and at the very least lead to questions about effective governance.
QBE Insurance will be the talked about company in financial circles this week – fodder for water cooler huddle gossip, the buzz around traders desks and the chatter around media newsrooms – but for all wrong reasons. The insurer's financial performance was completely overshadowed on Monday by the bombshell that its chief executive, John Neal, is having a romantic relationship with his executive assistant and the board docked his pay by $550,000.
It wasn't the kind of salacious affair that the public has been riveted by over the past few months over at Seven West Media involving its chief executive Tim Worner and his former much-younger staffer Amber Harrison. No sexting and allegations of cocaine, other women, wild office parties and abuses of credit cards.
Neal is separated from his wife and it seems now in a stable relationship with his executive assistant, although she is no longer working for him.
Corporate governance expert Dean Paatsch says it is not about a moral judgment, but the fact that leaders need to abide by the standards they set for others in the organisation.
The conflict can arise because employees in a relationship with their boss can be given favourable treatment. In Neal's case his secretary travelled overseas with him on several occasions as part of her job.
BHP Billiton chief executive Andrew Mackenzie has intensified his warnings that US trade protectionism under President Donald Trump would threaten global growth and the fight against poverty.
While applauding efforts by the administration to boost US growth and infrastructure spending, Mackenzie said the consequences of restricting free trade would be "pretty bloody awful".
BHP, which is also the largest overseas investor in US shale, "is very anxious about the possibility that instead of that good leadership, we could have bad leadership from the US on global free trade," the Scottish-born executive said in an interview with Bloomberg TV.
Global long-term growth is about 3 per cent but needs to be 4 per cent to get more people out of poverty, he said. "And that won't happen under a protectionist regime and protectionist leadership in the US."
Mackenzie and chairman Jacques Nasser met Trump in New York last month, before his inauguration, to discuss the resources sector.
Mackenzie's concerns echo those from leaders of the world's biggest banks, which have warned investors of Trump's potential to roil markets and slow global trade.
Standard Chartered chief executive Bill Winters, the former head of JPMorgan Chase investment bank, said last week that he's mapping out scenarios "if things get very messy and we get into the trade-war zone".
And now this from our reporter at Bellamy's EGM. (The shares are still halted.)
Proxies suggest @KathmanduGear co-founder Jan Cameron has failed in bid to become @BellamysOrganic director. Chan Wai-Chan succeeds. #ausbiz
— Madeleine Heffernan (@madeleineheff) February 28, 2017
Here's a slightly different take on earnings season: long before the collapse of listed furniture business Clive Peeters, the company put out a memorable trading update blaming its inability to move air-conditioners on everything from the price of petrol to the sharemarket.
So it is with some cynicism that investors evaluate the impact of the weather, which had an unusually frequent appearance this earnings season. A more than 40 per cent rise in the incidence of weather mentions suggests unseasonal conditions, beginning with 2016's mild winter, had a bigger impact on earnings than usual.
There have been 354 mentions of "weather" in ASX disclosures by Australian companies this profit season, versus 248 in the same period of 2016, an analysis of corporate filings shows. That figure was 260 in 2015 and 310 in 2014. This includes any use of the word in any context by a listed company.
For some sectors, such as agriculture, the weather will always be a variable. Most mentions this month have been confined to mining and energy stocks, where cyclones can wreak havoc on the loading of iron ore on ships.
But fund managers regard the weather, the currency and interest rates as things they only hear about selectively.
"I tend to always think it's a bullshit excuse," says small caps manager Dean Fergie from Cyan Investment Management. "If a business says 'Hey, we had a slow start to summer and we didn't sell enough board shorts', you'll never see the weather quoted when they have a great result, but that was mainly due to the weather. It will be about great management, excellent branding, smart marketing.
"I don't think you'll ever see weather adding to a positive result but you'll always see it as an excuse for a bad result."
The current account deficit has narrowed sharply to $3.85 billion in the December quarter, thanks to soaring commodity prices.
The deficit came in line with expectations and was down from a deficit of $10.2 billion the previous quarter.
Net exports will add 0.2 percentage points to fourth-quarter GDP, due tomorrow. Economists are predicting the economy to have grown 0.7 per cent in the December quarter, rebounding from a shock 0.5 per cent contraction in the previous three months.
Australia's terms of trade on goods and services, the prices of exports relative to the prices of imports, rose by 9.1 per cent in the quarter.
LNG now adding more to real GDP than iron ore and coal combined, 0.5pp in the year! Flattering topline real GDP growth.. #ausecon #ausbiz pic.twitter.com/j0oa9kY3VT
— Alex Joiner (@IFM_Economist) February 28, 2017
In other data out today, government spending for consumption was roughly unchanged in the fourth quarter at an inflation-adjusted $77.99 billion.
But investment spending by the government and public enterprises rose 7.7 per cent to $20.24 billion, implying total spending likely made a small addition to economic growth.
And finally, private sector credit grew just 0.2 per cent in January, less than the predicted 0.5 per cent rise and below December 0.7 per cent gain.
The dollar slipped marginally to the day's low of US76.70¢.
Bellamy's extraordinary general meeting (rather than AGM) is under way, and looks like things are getting tense...
Shareholders going crazy at @BellamysOrganic AGM. Angry at lack of detail on plans to turn company around. #ausbiz
— Madeleine Heffernan (@madeleineheff) February 28, 2017
Specialty Fashion shares have dropped 6 per cent to 60 cents despite the clothing retailer 's net profit reboundind 37 per cent to $12.1 million in the December-half after budget chain Rivers finally broke even.
But the result was overshadowed by uncertainty over a $135 million takeover offer. Al Alfia Holdings, an investment company controlled by the Qatari royal family, made an indicative, non-binding offer for Specialty Fashion last month pitched at 70¢ a share, valuing the company at $135 million.
Specialty Fashion said that due to unforeseen circumstances relating to the death of the father of the sole shareholder of Al Alfia, funding for the bid had been temporarily restricted in probate.
Al Alfia has told Specialty Fashion it is addressing the probate issue but has not been able to confirm when it will be resolved.
When the probate issue is resolved and Al Alfia returns to the Board with a proposal capable of being put to shareholders, the board will assess it on its merits.
Online surf and skate wear retailer SurfStitch Group expects to spill more red ink this year even though losses narrowed in the December-half.
After a deterioration in trading conditions in January and February, chief executive Mike Sonand now expects SurfStitch to lose between $5 million and $6.5 million before interest, tax, depreciation and amortisation, compared with a previous forecast for losses between $4 million and $5 million.
This represents a big improvement on SurfStitch's underlying EBITDA loss of $18.8 million in 2016.
However, it is likely to disappoint investors hoping for a return to profit this year after a horror 18 months, during which time the company lost its founding chief executive and shredded almost $500 million in shareholder value.
SurfStitch's net loss almost halved to $8.3 million in the six months ending December - compared with a loss of $14.5 million in the year-ago period - after the retailer sold loss-making businesses, slashed costs, cut back on discounting and simplified its product range.
Losses from continuing operations, excluding Surf Hardware International, which was sold in December, narrowed to $5.6 million from $13.5 million previously.
Group sales fell 13 per cent to $106.3 million, dragged down by the weaker Australian dollar and a 30 per cent decline in sales in North America, where the retailer embarked on a deliberate strategy of eschewing low-margin sales.
Gross margins improved from 39.7 per cent to 44.8 per cent, leading to a $5.2 million improvement in underlying EBITDA, from a loss of $6.5 million to a loss of $1.3 million.
SurfStitch shares are unchanged at 18¢, compared with their December 2014 issue price of $1 and a November 2015 high of $2.09, when the company issued new stock to fund a string of acquisitions.
SurfStitch is now worth $50 million compared with $550 million in 2015, when founding CEO Justin Cameron embarked on an aggressive acquisition spree aimed at transforming the company into the "Amazon Prime" of the action sports market.
Mr Cameron quit unexpectedly last March, supposedly to pursue a private equity-backed privatisation, which failed to materialise.
Harvey Norman has posted a record first-half result after $76 million in property revaluations combined with strong sales of furniture and appliances at franchised stores fuelled a 39 per cent increase in net profit to $257.3 million.
Investors immediately gave the result the thumbs up, driving up the shares 2 per cent to $5.23.
The better than expected result was boosted by $75.7 million in net property revaluations on Harvey Norman's Australian investment properties, a big increase on $21.2 million in property revaluation gains booked in the year-ago period.
Excluding property revaluations and asset impairments, underlying net profit rose 17.7 per cent to $215.2 million, slightly ahead of consensus forecasts around $212 million.
Underlying pre-tax profit rose 20.6 per cent to $290.49 million, the highest first-half result in the group's 30-year history.
Harvey Norman increased its interim dividend 1¢ to 14¢ a share.
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