That's it for Markets Live today.
Thanks for reading and for your comments.
See you all again tomorrow morning from 9am.
![market close](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/2/g/h/4/2/image.imgtype.columnistThumbnail.60x60.png/1427260967167.jpg)
The ASX blew back above the 5800 mark today, in its second day of strong performances, which one senior trader is attributing to investors cramming funds into superannuation accounts in a bid to avoid regulatory changes coming into effect on July 1.
The benchmark S&P/ASX 200 index added 1.1 per cent to 5833.9, while the broader All Ordinaries rose 1.0 per cent to 5862.2.
It's the first solid leg up in some time for the ASX, which was heavily sold down beginning in May and had a less-than-auspicious start to June.
Bell Potter senior trader Richard Coppleson attributed the market's robustness to the superannuation changes taking place on July 1, which will place caps on concessional contributions.
"With the 'super changes' on 1st July 2017, we are seeing massive (last minute) inflows in to super. The size of the inflows I understand is very large and (will continue to have) an influence on the market," he wrote to clients.
Around 40 per cent of all contributions into superannuation in turn go into the Australian sharemarket, noted Katana Asset Management's Romano Sala Tenna.
He was nonetheless not expecting the rally to extend much further.
"We're a little bit surprised it's bounced so aggressively," he said. "There's no doubt that equities are, at least, fully-valued right now."
Leading the market on Wednesday was strength in the big four banks. CBA added 1.4 per cent, Westpac rose 1.6 per cent, NAB added 0.6 per cent while ANZ rose 0.8 per cent.
Biomedical shares continued their upward trajectory. CSL, Cochlear and Resmed Cochlear hit fresh all-time highs, with CSL rising 3.2 per cent, Cochlear adding 0.6 per cent while Resmed closed up 2.2 per cent.
The miners tread water, after the iron ore price hit a 12-month low. Rio Tinto was flat, BHP Billiton added 0.1 per cent, while Fortescue Metals group managed to rise 3 per cent.
Telstra, whose share price has been under pressure this year, shed 0.5 per cent after telling investors it planned to cut 1,400 jobs in a bid to slash costs.
Meanwhile, the Ten Network was placed into voluntary administration. Its shares are in a trading halt.
![Winners and losers in the ASX 200 today.](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/r/3/1/k/image.related.articleLeadwide.620x349.gwr323.png/1497422332413.jpg)
![need2know](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/2/g/h/4/5/image.imgtype.columnistThumbnail.60x60.png/1427239371417.jpg)
If only analysts at Barclays had measured twice, perhaps they wouldn't have had to cut once.
Analyst Christine Cho cut her rating on SemGroup to equal weight - normally an unremarkable change for a $US1.9 billion company whose stock plunged more than 15 per cent over two days last week.
But Cho's downgrade came just hours after she had told clients the prior week's rout left the energy-transportation company at an attractive valuation, warranting an overweight rating.
Turns out, the abrupt about-face came after the analysts discovered the firm's new price target failed to tally an estimated 11 million shares when looking at the total stock issued. That led to an artificially inflated valuation.
"We are updating our model and rating due to a share count miscalculation," she wrote, downgrading the shares back to equal weight and returning her price target to $US32 from $US36.
Both notes moved the shares. The upgrade SemGroup higher by as much as 3.4 per cent to $US29.10 at the open. The stock erased all of that advance within minutes of the second note's dissemination around 11.15am in New York.
The analyst can take solace in the fact that she's far from the first to make such an error: a Piper Jaffray analyst downgraded and upgraded shares of hair salon chain Regis in the same morning amid confusion over how a regulatory change would affect its costs.
![](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/1/m/8/3/k/r/image.imgtype.columnistThumbnail.60x60.png/1427331725030.jpg)
And just one last Ten Network story: Bruce Gordon and Lachlan Murdoch will form a joint venture to restructure the company, which could potentially result in the pair taking the free-to-air broadcaster private down the track.
The News Corporation co-chairman and the WIN Corporation owner are planning to work together, owning 7.7 per cent and 15 per cent respectively through their private investment vehicles, Illyria and Birketu, and propose a restructure which could see Ten's existing loan repaid, according to an announcement on the ASX.
It's believed the partnership could result in Ten being taken private by Mr Gordon and Mr Murdoch if the government is successful in changing media ownership regulations which prevent the pair from buying it now.
It's understood Mr Gordon, John Atanaskovic, Mr Gordon's lawyer and counsellor, Mr Murdoch and his lieutenant Siobhan McKenna, put the deal together.
However, they have sought to make clear the tie-up does not constitute takeover bid for Ten and say it does not contravene current media ownership regulation.
Mr Gordon currently cannot buy Ten because of the "reach rule" which prevents a television network from broadcasting to more than 75 per cent of the population. Mr Murdoch cannot buy Ten because of the "two out of three rule" which prevents the ownership of a newspaper, TV network and radio station in the same market.
The government is seeking to scrap those regulations but does not yet have support in the Senate. Communications minister Mitch Fifield will introduce the bill to the House of Representatives on Thursday.
![<p>](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/1/m/8/3/5/t/image.imgtype.columnistThumbnail.60x60.png/1470181241196.jpg)
Australian banks are prepared to lend about 25 per cent more to home buyers than banks in the United Kingdom or the United States, despite a tightening in credit standards in recent years, new research suggests.
Banks have chopped tens of thousands of dollars off the maximum amounts they will lend prospective home buyers in Australia since 2015, in an attempt to dampen risks in the housing market.
New research from Macquarie analysts highlights the extent of the cuts - showing the borrowing capacity of a hypothetical property investor customer has shrunk by $70,000 in the past year alone.
Even so, the analysis suggests Australian banks are still prepared to lend borrowers here larger multiples of their income than banks in the UK and US, despite these countries having lower interest rates.
Canadian banks offered similar borrowing capacity to Australia's banks, the analysts found.
The report predicts "further tightening in borrowing limits", which could dampen loan growth in the banking system.
The findings are based on a "mystery shopping" exercise, where analysts led by Victor German tested how much banks would lend to a hypothetical customer with an income of $105,000, no dependents, and a good credit history.
The analysts estimated that on average, the big four Australian banks have in the past two years cut the maximum amounts they will extend to such a person by up to 19 per cent if they were buying a home to live in. The cut to borrowing power was greater, at 26 per cent, if they were buying an investment property.
"While this reduction appears significant, we note that current borrowing capacity remains above the 2011 levels and we continue to expect further tightening in borrowing limits," the report said.
"Our international comparison also highlighted that UK and US banks were generally prepared to lend 20 per cent to 25 per cent less than Australian banks for owner occupier debt, despite lower interest rates in these markets. "
![Borrowing capacity for owner-occupier loans.](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/r/2/6/c/image.related.articleLeadwide.620x349.gwr2c2.png/1497420669922.jpg)
![I](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/1/m/8/3/a/m/image.imgtype.columnistThumbnail.60x60.png/1455860574632.jpg)
AMP, CSR and News Corp are among eight companies Credit Suisse believes are ripe for a shake-up by activist investors.
While the active versus passive debate rages – with passive index funds easily outstripping the performance of most high-fee active managers – activist investing has been the top hedge fund strategy, delivering an annualised return of more than 7 per cent, Credit Suisse said.
As a strategy, activism investing comprises value investors who agitate, often vocally, for capital returns and often encourage companies to lift productivity by divesting assets. A current local example is US hedge fund Elliott Associates lobbying for a restructure at BHP Billiton.
Credit Suisse has identified AMP, BHP, Caltex, CSR, Fletcher Building, Lend Lease, Myer and News Corp as ASX-listed firms with potential for shareholder agitation.
"These stocks are cheap, these stocks can support accelerated capital returns, and these stocks can divest assets to be more productive," Hasan Tevfik, head of Australian equity research at Credit Suisse, said in a note to clients.
"Our activist opportunities in Australia trade on an average 12-month forward P/E of 14.1x and a free cashflow yield of 7.4 per cent. The market median is currently 16.9x and 5.6 per cent."
Credit Suisse thinks an activist shareholder strategy could extract 27 per cent of extra value from these stocks, an equivalent of $27 billion in total.
![](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/r/0/b/c/image.related.articleLeadwide.620x349.gwr140.png/1497419090273.png)
![money printing](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/1/m/8/w/x/b/image.imgtype.columnistThumbnail.60x60.png/1492495306289.jpg)
Embattled telecoms operator Vocus Group has reaffirmed its earnings guidance and told unsettled investors it has a plan to transform its business as it confronts a $3.3 billion takeover approach from private equity giant Kohlberg Kravis Roberts & Co.
At a strategy day in Sydney today, Vocus said it stil expects full year profits to be between $160 million and $165 million and revenue to be about $1.8 billion. It outlined plans to cut costs, transform aspects of its business and win market share from rivals on the NBN.
"We have not achieved everything we wanted to achieve with this business," chief executive Geoff Horth acknowledged to investors.
Vocus slashed its guidance in May, having only affirmed earnings expectations months earlier. That downgrade came after the company missed market expectations with its annual results last in November.
Last week, storied leveraged buyout firm KKR swooped with a bid for Vocus, valuing the company at $3.3 billion, including debt.
Vocus' shares were trading near record lows prior to the approach, and the company's biggest shareholder has described the approach as "opportunistic". There is speculation competing offers from private equity or trade buyers may emerge.
Mr Horth declined to say when the company would decide whether to grant KKR access to its books, or reject its offer. " That is in the hands of the board committee," he said. "The valuation work is progressing"It has been a tumultuous period for Vocus, which has been involved in a string of mergers and acquisitions over the past couple of years.
These include a $1.2 billion merger with Amcom, a $3.8 billion merger with M2 Group and the $807 million purchase of inter-city fibre network Nextgen.
Last year the company was rocked by a string of executive departures, headlined by founder James Spenceley.
Investors and analysts believe Vocus has an enviable set of assets; including a fibre network linking Australia's major metropolitan cities and to NBN points of interconnect.
Vocus stock is up 1.4 per cent to $3.68.
![](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/r/0/6/a/image.related.articleLeadwide.620x349.gwr06l.png/1497418020277.png)
![The yield on the Australian 10-year](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/1/m/8/w/x/g/image.imgtype.columnistThumbnail.60x60.png/1475200777471.jpg)
Is the current rough patch in the economy just a temporary blip or the start of a major downturn?
That's a question being mulled at the RBA, and as such likely to determine the direction of the next move in interest rates.
To recap: the economy grew just 0.3 per cent in the first quarter, down from 1.1 per cent in the previous three months, but the disappointing slide in growth is currently still being blamed mainly on temporary factors such as bad weather.
But of late, consumers have been increasingly reluctant to spend, a worrying trend that could put at risk the RBA's optimistic projections for 3 per cent annual GDP growth over the next years.
Today's weak consumer confidence numbers, which showed another drop in Westpac's index to even more pessimistic levels, will just feed the narrative of a spending strike.
"Soft consumer spending and a slowing in the housing cycle will act to constrain growth to below RBA and government forecasts," says AMP Capital Investors head of investment strategy Shane Oliver. "As such, there is far more chance of another RBA rate cut than a hike over the next year."
JPMorgan interest rate strategist Sally Auld has just pushed back her predictions of two further RBA rate cuts, taking the cash rate to a rock-bottom 1.00 per cent, to the first half of next year, from the second half of this year.
But she says the justification for additional easing remains intact, pointing to persistently low inflation, and in particular soft wages growth, which is weighing on debt serviceability and in turn keeping a lid on consumer confidence.
"The current setting of overall financial conditions does not appear loose enough to generate growth in domestic demand that is consistent with achieving the (RBA's) inflation target," she says.
While markets are currently seeing it as more likely the RBA will cut than hike, at least this year, two more rate cuts is on the extreme side of forecasts, with most economists predicting the central bank will remain on hold well into next year while retaining an easing bias.
On the hawkish side is Goldman Sachs, which is sticking with its prediction of a rate hike - by the end of this year.
Economist Andrew Boak says he is looking through the "temporarily" weak net exports numbers that brought down first-quarter GDP, focusing instead on strong corporate profits growth and resurgent jobs growth, as well as negative "real" rates (nominal rates minus inflation).
"With major downside tail risks to the outlook diminishing, so is the justification for policy rates to be calibrated at 'emergency' low levels – and particularly as they continue to exacerbate financial imbalances."
Boak says the increased pessimism around households also looks overdone and expects the robust employment market to spark a rebound in the wages index by the end of the year, which should support consumer sentiment and consumption.
"We are confident that the RBA will not cut rates again this cycle, and retain our out-of-consensus view that a rate hike by the end of 2017 is slightly more likely than not."
![Businesses are much more upbeat than consumers.](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/q/y/c/j/image.related.articleLeadwide.620x349.gwqycr.png/1497485021050.jpg)
Here's a nice chart from ANZ's Justin Fabo via Twitter showing the tight relationship between Chinese residential construction activity and the iron ore price:
Iron ore: Snap back to reality, oh there goes gravity... pic.twitter.com/mmPTgk5hyd
— Justin Fabo (@justinfabo) June 14, 2017
![Oil is trading at 1 2015 high after another overnight rally.](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/1/m/8/3/m/k/image.imgtype.columnistThumbnail.60x60.png/1444363506474.jpg)
The chance of crude oil prices slumping to $US30-$US35 a barrel for several years, sending the global economy into crisis and multiple producers into bankruptcy, has emerged as a real threat, according to one of the world's leading forecasters.
Fereidun Fesharaki, chairman of respected energy consultancy FGE, said much higher US production growth was combining with a recovery in production in Libya and Nigeria, and the start-up of a massive field in Kazakhstan, to cancel out the effects of production cutbacks by the rest of the Organisation of Petroleum Exporting Countries.
That sets up a bearish scenario for prices, which have already slid about 10 per cent in the past three weeks. Brent crude is trading around $48.30 a barrel.
"Today the market move is very negative," Dr Fesharaki said in an interview in Sydney.
"It takes very little for the prices to just drop to $US40. And then the Saudis have to intervene by cutting back by themselves, and I think they are ready to do it."
FGE's "base case" forecast is still for an initial drop in crude prices in the next weeks and then a recovery as Saudi Arabia is prompted to take unilateral action to further cut back output.
But the consultancy now puts a 30-40 per cent probability on its "alternative" scenario, where prices slump to $US35 or less and remain there through the 2018-2020 timeframe. Just a few months ago, FGE put "zero" chance of that occurring, said Dr Fesharaki, a former energy adviser to the Iranian government.
He said discussions with FGE clients had shown that producers were now quite comfortable with prices at $US45 a barrel, in contrast to their views 12 months ago. Even at $US40 a barrel, "half" of them can "manage", he said, noting that only with prices as low as $US30 are they all under water.
"So if you want to kill the beast you have to go there, and stay there for two, three years," Dr Fesharaki said.
"The ramifications of it for the stockmarket, for OPEC budgets, for political stability, are huge, and the bankruptcies that will come as a result of this."
Read more of this terrifying vision of the future here (AFR).
![The chance of crude oil prices slumping to $US30-$US35 a barrel for several years, sending the global economy into ...](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/5/j/t/0/image.related.articleLeadwide.620x349.gwqxlr.png/1497419387378.jpg)
![The yield on the Australian 10-year](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/1/m/8/w/x/g/image.imgtype.columnistThumbnail.60x60.png/1475200777471.jpg)
While the Fed is expected to continue its tightening path tonight, the RBA is more likely to cut than hike over the coming months.
Futures trading in the fixed income market suggests a 14 per cent chance of a cut in the official cash rate by the November meeting. That would bring it to 1.25 per cent from 1.5 per cent today.
JP Morgan rates strategist Sally Auld is one of the more bearish forecasters out there. She had been expecting two rate cuts over the second half of this year, but she has now pushed that out to 0.5 percentage points of easing over the first six months of 2018, which would bring the RBA's target to a "terminal" rate of 1 per cent.
"While we believe both recent developments (such as the macro-prudential regime) and the tone of recent data provide more support to the view that rates will be eventually cut to 1 per cent, we think that the nature of the current economic adjustment is more sympathetic with RBA easing taking longer to occur," she writes.
Auld also says that the RBA will "probably take some time to gain comfort that efforts to slow growth in house prices and credit are sustainable", by which she means regulatory measures such as caps on investor lending and stern words around lending standards.
The nub of the matter, Auld says, is that the nature of the current economic adjustment is "more nominal than real".
That's the kind of explanation that requires an example, and Auld obliges using the labour market: "The adjustment is taking place via weak labour incomes growth and declining rates of growth in hours worked rather than through job losses and a rising unemployment rate," she writes.
She makes the distinction between "a chronic, incomes-based adjustment and an acute real shock to the economy is important for the monetary policy outlook," Auld says.
With the lack of a specific "shock", what will eventually move the RBA is "an accumulation of modest disappointments":
"In particular, the nature of the slow grind nominal adjustment allows the RBA the liberty of looking through modest activity data disappointments and holding the line with neutral guidance. Recent GDP data are a case in point.
"So without a material shock to real activity data, the case for further easing from the RBA relies on the idea that it will eventually be an accumulation of modest disappointments to activity data which forces the RBA's hand. This process clearly takes some time to play out, hence our view that the case for RBA rate cuts will take longer to build."
![The RBA will cut rates twice next year, JP Morganreckons.](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/h/u/g/1/image.related.articleLeadwide.620x349.gwqwfm.png/1497587168501.jpg)
And here's the day's action on the ASX so far in moving pictures:
![eye](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/1/m/8/w/x/h/image.imgtype.columnistThumbnail.60x60.png/1491366470453.jpg)
A US rate rise overnight is pretty much a done deal, but currency investors remain on tenterhooks as they wait for clues on the Fed's policy for the rest of the year.
The Fed is scheduled to announce its monetary policy decision at 4am AEST tomorrow morning at the end of a two-day policy meeting, followed by a press conference by chair Janet Yellen.
The Fed may also provide more clues on how it plans to reduce its holdings of more than $US4 trillion in Treasuries and mortgage-backed securities.
Economists overwhelmingly see the US central bank hiking its benchmark rate to a target range of 1.00 to 1.25 per cent this week, though expectations for further rate increases are fading.
What emerges from the Fed meeting "is certainly going to chart the course for a lot, including the strength of the US dollar," said Bill Northey, chief investment officer at the private client group of US Bank.
"There is some risk that we could see a more dovish outlook," he said.
Fed funds futures on Tuesday suggested traders saw about a 29 per cent chance of rates rising to 1.25-1.50 per cent at the Fed's September 19-20 meeting, and a 57 per cent chance of such a move at its December 12-13 meeting .
"What investors want to know most is the pace of rate hikes going forward," said Ayako Sera, senior market economist at Sumitomo Mitsui Trust.
"With many market participants worried about a dovish outlook, a surprisingly hawkish one could catch some investors off guard," she said. "The US economy isn't doing so badly, so anything is possible."
![](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/q/u/n/l/image.related.articleLeadwide.620x349.gwqunw.png/1497410269935.jpg)
![china](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/2/b/d/k/e/image.imgtype.columnistThumbnail.60x60.png/1429585740303.jpg)
China's factory output grew 6.5 per cent in May from a year earlier, slightly better than expectations, but fixed-asset investment grew 8.6 per cent in the first five months of the year, less than forecast.
Analysts had predicted factory output would grow 6.3 per cent in May, easing slightly from 6.5 per cent growth in April.
Fixed asset investment had been forecast to grow 8.8 per cent over the first five months of the year, easing from 8.9 per cent in January-April.
Retail sales rose 10.7 per cent in May from a year earlier, unchanged from April and above analyst expectations for a 10.6 per cent rise.
Growth of private investment slowed to 6.8 per cent in January-May from 6.9 per cent in the first four months, suggesting a slight weakening of the private sector's appetite to invest as small- and medium-sized private firms still face challenges in accessing financing.
Private investment accounts for about 60 per cent of overall investment in China.
China is targeting growth of around 9 per cent in fixed asset investment for 2017, and expects retail sales to increase about 10 per cent.
Lastly, property investment growth eased for the first time in three months in May, a Reuters calculation showed. It grew 7.2 per cent from a year ago, compared to a rise of 9.6 per cent in April.
"Property curbs started to take a toll on investment growth. Other than that, the readings are quite good. Industrial output is growing relatively quickly, and consumption remains robust," said Gao Yuwei, a researcher at Bank of China's Institute of International Finance in Beijing. "The second quarter in general shows signs of stabilisation."
China has cut its economic growth target to around 6.5 per cent this year to give policymakers more room to push through painful reforms and contain financial risks after years of debt-fueled stimulus.
Beijing has continued to tighten the screws on riskier forms of financing, which is expected to drag on the world's second-largest economy in coming months after an unexpectedly strong first quarter.
!['Signs of stabilisation' in the second quarter.](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/g/u/o/5/9/p/image.related.articleLeadwide.620x349.gwqt70.png/1497408008903.jpg)
![I](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/1/m/8/3/a/m/image.imgtype.columnistThumbnail.60x60.png/1455860574632.jpg)
A record number of money managers say equities are overvalued, while three-quarters reckon internet stocks are either expensive or in a bubble, according to Bank of America-Merrill Lynch's latest global survey.
In a note titled "Fed up with bubbles", the BAML strategists say the survey results show the US Federal Reserve is tightening at a time of "peaking macro momentum, high cash levels, crowded Nasdaq" and at a time when more investors saying equities are overvalued than during the 1999 tech bubble highs.
The responses from the professional money managers suggest the best way to describe the Fed's tightening this week is as a "preventative hike to subdue Wall St speculation".
"But we say too little, too late" to prevent a sharemarket melt-up, the strategists write.
That said, there is also a lack of "irrational exuberance" on display from the professional investors as cash levels are high - a marked difference from the dot-com boom (see chart).
And another difference with the '99 bubble is that excess valuations are coinciding with higher profit expectations. This is a reminder that while vulnerability is high, it's missing the combination for an immediate "big top", which is higher yields/falling earnings per share, the strategists add.
![](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/q/s/8/t/image.related.articleLeadwide.620x349.gwqqoy.png/1497406690611.jpg)
![money printing](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/1/m/8/w/x/b/image.imgtype.columnistThumbnail.60x60.png/1492495306289.jpg)
Embattled telecoms operator Vocus Group has reaffirmed its earnings guidance and told unsettled investors it has a plan to transform its business as it confronts a $3.3 billion takeover approach from private equity giant Kohlberg Kravis Roberts & Co.
At a strategy day in Sydney, Vocus said it still expects full year profits to be between $160 million and $165 million and revenue to be about $1.8 billion. It outlined plans to cut costs, transform aspects of its business and win market share from rivals on the NBN.
Vocus slashed its guidance in May, having only affirmed earnings expectations months earlier. That downgrade came after the company missed market expectations with its annual results last in November.
Last week, storied leveraged buyout firm KKR swooped with a bid for Vocus, valuing the company at $3.3 billion, including debt.
Vocus' shares were trading near record lows prior to the approach, and the company's biggest shareholder has described the approach as "opportunistic". There is speculation competing offers from private equity or trade buyers may emerge.
Shares are up 0.6 per cent at $3.66.
![](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/1/m/8/3/o/z/image.imgtype.columnistThumbnail.60x60.png/1427331849695.jpg)
Channel Ten has announced it will go into voluntary administration.
KordaMentha has been be appointed as administrator by the company after it announced yesterday that its billionaire shareholders would no longer guarantee a key loan.
The company's board of directors were left with "no choice but to appoint administrators" after receiving notice over the weekend from the network's major backers that they would no longer back it.
In an ASX statement, the directors said they "regret very much that these circumstances have come to pass". They also pointed to cost savings under way, including "renegotiation of programming contracts" which, if implemented, would halve "future liabilities for US content while still allowing Ten access to the best productions of those studios over the medium term".
![commodities](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/1/m/8/w/x/l/image.imgtype.columnistThumbnail.60x60.png/1438217120195.jpg)
The slump in the iron ore price might have some investors with their fingers on the panicked sell button, but economists are saying the drop is no doomsday scenario.
The bulk commodity's spot price hit a 12-month low of $US53.36 a tonne overnight and futures also fell amid growing concern that a slowing Chinese property market may dent steel demand.
Australia's largest export has dropped 40 per cent from its peak in February.
Iron ore: Snap back to reality, oh there goes gravity... pic.twitter.com/mmPTgk5hyd
— Justin Fabo (@justinfabo) June 14, 2017
Weighing on the price are recent Chinese steel export figures, which show a 30 per cent year-on-year fall in May, continuing the downward trend that began in August.
The United States, India and the European Union have instigated protective trade measures in a bid to prop up their own steel industries, and as such have dampened Chinese exports.
Compounding the global protectionist attitude surrounding trade, is the tightening of credit conditions in China over the last quarter and the threat of significant oversupply.
While both Australian and Brazilian producers had a muted start to 2017 thanks to lousy weather, experts expect a net 35 million tonne increase in Australian output - including from the newly producing Roy Hill - and a net rise of 20 million tonnes out of Brazil.
While that paints a pretty gloomy picture for the iron ore price over the near term, Deutsche Bank points to a solid pipeline of Chinese infrastructure projects to uphold steel demand.
"Although it is difficult to paint an outright bullish picture for Chinese steel demand, we do not see an outright collapse," says research analyst Grant Sporre.
"Even if order books for the state owned constructors decline in 2018, the lag between order book and project spend should ensure that Chinese steel demand remains reasonably firm."
The research team points to a positive shift for industrial profitability and an expectation of modest capex growth in 2017.
![](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/q/o/b/o/image.related.articleLeadwide.620x349.gwqoc1.png/1497409169622.jpg)
![eco news](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/2/b/d/k/f/image.imgtype.columnistThumbnail.60x60.png/1426030549910.jpg)
Consumer gloom remains at odds with upbeat business conditions:
A measure of consumer sentiment fell for a third straight month in May as disappointing news clouded the outlook for the economy.
The survey of 1200 people by the Melbourne Institute and Westpac Bank found consumer sentiment fell 1.8 per cent in June, from May when it dipped 1.1 per cent.
Economic conditions, the government's budget, taxes and interest rates were the top news topics recalled by consumers, and developments in all were judged as "unfavourable".
The survey was taken in a week when official data showed the economy grew a slim 0.3 per cent in the first quarter, while annual growth was the slowest since 2009.
"The disappointing March quarter GDP update clearly had a hand in the weak result," said Westpac senior economist, Matthew Hassan. "The index is now back in firmly pessimistic territory."
The index reading of 96.2 was 5.8 per cent lower than in June last year and meant pessimists outnumbered optimists.
The main weakness came in the economic outlook with the measure on conditions for the next 12 months falling 4.8 per cent and that for the next five years down 8.3 per cent.
Yesterday, NAB's monthly survey showed businesses have just enjoyed the best month since the 2008 global financial crisis may be giving a more accurate reading of how the economy is doing than last week's weather-blighted GDP report.
While many economists have been downbeat in the wake of the recent first-quarter national accounts that showed annual growth of just 1.7 per cent, NAB's business conditions index has strengthened in recent months.
"Forget GDP - watch this instead," said HSBC chief economist Paul Bloxham on Tuesday.
![Weakening housing market is leaving its marks on sentiment.](http://web.archive.org./web/20170617153500im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/q/p/t/t/image.related.articleLeadwide.620x349.gwqptw.png/1497403117716.jpg)
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Teleco giant Telstra is set to cut up 1400 jobs [EDs: not 1500 jobs as initially reported] from "operations" as it looks to slash costs and deal with an up to $3 billion earnings hole expected because of the national broadband network.
Telstra chief executive Andy Penn is expected to brief staff later today.
Last year, Telstra announced it was looking for $1 billion in cost savings over the next five years.
The telco needs to fill a $2 billion to $3 billion hole in EBITDA following the completion of the rollout of the national broadband network in 2020.
Telstra shares are up 0.5 per cent to $4.40.
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