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Shares have ended the session posting the slimmest of gains, as the market treads water ahead of Fed chief Janet Yellen's two-day testimony to Congress.
Mining stocks were among the clear winners of the day, thanks to rises in select commodities, including iron ore and oil.
BHP added 0.9 per cent to $24.78, hitting a three-month high during the session, Rio gained 0.6 per cent and Fortescue lifted 3.1 per cent.
The big banks ended mixed, with Westpac rising 0.4 per cent, while NAB slipped 0.3 per cent and CBA closed flat.
Blood products giant was the biggest drag on the main index, shedding 0.7 per cent, followed by Scentre Group, down 1.5 per cent and Telstra, which lost 0.5 per cent.
A2 Milk is one of the day's winners, rising 3.3 per cent to $3.78 after Deutsche upgraded the stock to 'buy'.
Brand interest above peers, rising wealth levels, relaxation of one-child policy and China's preference for imported products underpin potential earnings upgrades, according to the broker.
"A2 Milk's robust outperformance over the last two years has been earnings upgrade driven. Looking forward, we see potential for this to continue," the analysts say in a note to clients.
A push into new distribution channels may reduce potential Chinese regulatory risks to daigou sales, they said.
The company got about 15 per cent of its revenue from China in the first half of 2017, according to Bloomberg.
Deutsche upped its price target for the dual-listed stock to $NZ5.00, from $NZ3.30. In Auckland shares rose 5 per cent to $NZ4.02 today.
While the ASX is treading water most markets around the region are rising, as investors await testimony from Federal Reserve chair Janet Yellen for clues on when the central bank will next tighten US monetary policy.
Japan's Nikkei stock index is up 0.7 per cent, buoyed by a weaker yen, while Hong Kong's Hang Seng has gained 1.5 per cent, China's CSI300 is up 0.8 per cent and the Kospi in Korea has added 0.5 per cent.
"Except for worries about North Korea, the situation in Asia is calm at the moment, and this is giving some relief to investors," said Kyoya Okazawa, head of global markets, Japan and Korea, at BNP Paribas.
The US dollar index, which tracks the greenback against a basket of six major rivals, jas added 0.2 percent to 96.163 ahead of Yellen's semi-annual monetary policy testimony before Congress on Wednesday and Thursday.
"Normalisation of monetary policy in the coming months is almost priced in, and the Fed will start shrinking its balance sheet in September, and this does not necessarily mean a delay of rate hikes," said Masafumi Yamamoto, chief forex strategist at Mizuho Securities.
"This is supporting the dollar as a positive factor, and limiting its downside at the moment," he said. "I think Yellen will confirm that rate hikes are coming, and that balance sheet shrinkage will come."
The Canadian dollar is down slightly against its US counterpart as investors also await a Bank of Canada interest rate decision on Wednesday.
Economists are still divided on whether the central bank will raise rates but data from the overnight index swaps market shows that money markets are almost fully priced for an increase, while an 80 per cent chance of a second hike has been implied by December.
Disruptive forces such as renewable energy and driverless cars are forcing investors to rethink infrastructure investments, as rapid changes in technology reshape the future of electricity networks and transport companies.
Infrastructure assets have traditionally been valued for their safe and steady returns, and considered good long-term investments. But new technologies are now threatening the sector's reputation as a "boring" investment, fund managers say.
"Just because business model disruption in infrastructure has been limited over the last decade, does not mean it won't happen in the future," said Andrew Greenup, deputy head of global listed infrastructure at Colonial First State Global Asset Management (CFSGAM).
"The speed of disruption can destroy business models globally," he said.
Among the infrastructure businesses singled out as vulnerable to disruption are electric transmission and distribution grids, which are being challenged by distributed generation and battery storage.
Among the others are tollroads and passenger railways, which may be affected by the emergence of driverless cars; and ports and freight railways, which could lose volumes as 3D printers reduce the need to move manufactured goods around the world.
Mobile towers could lose market share when fifth generation wireless technology arrives, increasing the speed at which data can be transferred across networks.
The assets considered least likely to be disrupted are airports, which benefit from a continuing boom in global air travel, as well as water and gas utilities.
Among the indicators mentioned in the following tweet are presumably the ANZ job ads survey as well as the NAB business survey, which is also pointing to continuing employment growth:
A wide array of indicators point to a continuation of solid to strong Oz jobs prints in coming months. #ausecon pic.twitter.com/uleRB1p8xH
— Justin Fabo (@justinfabo) July 11, 2017
Local ETF provider Betashares has captured bigger Australian inflows than its rivals including global investment giants Vanguard, StateStreet and Blackrock.
Data from Bloomberg shows that for the year to date Betashares products have attracted $833 million in new funds compared to Vanguard's $678 million, State Street's $371 million and Blackrock's $267 million.
Betashares founder and managing director Alex Vynokur said the result was evidence that ETFs are being embraced more broadly by investors. Among the products that captured the bulk of the flows were its cash, smart beta, dividend and NASDAQ funds.
"ETFs are now being used as a core part of people's asset investment program. If you want income you can get that, if you want global exposure you can get that too. ETFs are becoming mainstream," Vynokur said.
Widespread underperformance from active fund managers has helped support inflows to ETFs which are mostly – but not all – passive instruments.​
A top US central banker says he still expects one more rise in interest rates from the Federal Reserve this year and for it to start unwinding its massive balance sheet in the next few months.
Answering audience questions at an economics event in Sydney, San Francisco Federal Reserve Bank president John Williams said he believed a recent softening in US inflation was transitory and that inflation would pick up to around 2 per cent over the coming year.
Williams emphasised that if inflation did not accelerate as expected, that would argue for a much slower pace of rate rises than currently projected.
He also noted that raising rates and trimming the balance sheet were complimentary forms of tightening and his projections for policy took that into account.
Oil prices are continuing to edge higher, lifted in part by a strong demand outlook for the coming weeks, but overall market conditions remain weak on the back of ample supplies and a more subdued outlook for long-term demand.
Brent crude futures are up 0.5 per cent at $US47.11 per barrel.
Traders said the uptick in prices was in part due to healthy demand expected in the coming weeks.
Weekly US petrol demand data "compares favourably to the five-year average and miles driven also continue to grow year-on-year," Bank of America Merrill Lynch said.
However, beyond the seasonal strength, "US gasoline demand may have peaked in absolute terms last year", it said, adding that there was no structural tightness in sight once the peak demand summer season finishes.
Crude prices are still about 17 per cent below their 2017 opening levels despite a deal led by OPEC to cut production from January.
"Traders are worried that increasing supply from Nigeria and Libya, both of which are recovering from internal conflict, will continue and further undermine the output caps agreed to by OPEC and Russia," said William O'Loughlin, investment analyst at Rivkin Securities.
OPEC along with some other producers like Russia, but excluding the United States, agreed to hold back around 1.8 million barrels per day (bpd) of production between January this year and March 2018.
However, an over 10 per cent jump since mid-2016 in US production to 9.34 million bpd, as well as rising output from Nigeria and Libya, OPEC-members who were exempt from cutting, have undermined efforts to tighten the market.
"The simple truth is that OPEC and Russia have to contend with the fact that there is output growth elsewhere diluting their efforts at reducing supply," French bank BNP Paribas said.
"We thus have made deep cuts to our crude oil price forecasts. We now see the price of WTI averaging $US49 per barrel 2017 (-$US8/barrel revision) and that of Brent $US51 per barrel (-$US9/barrel revision). We also revise downwards 2018 with WTI averaging $US45 per barrel (-$US16 per barrel) and Brent $US48 per barrel (-$US15/barrel revision)," BNP said.
Some reactions to today's NAB business survey, which shows business conditions have hit their highest in nearly 10 years.
Craig James, CommSec:
Aussie businesses are enjoying the best operating conditions in almost a decade. And they are loving it. Interestingly though, the favourable conditions have been accompanied by a lift in key inflation indicators. The good news for consumers is that businesses have noted an upturn in labour costs – growing at the fastest pace in 3½ years. If the better business conditions lead to higher employment and wages then consumers may start cheering as well.
Daniel Gradwell, ANZ:
Much of the trend improvement in business conditions in recent months has been driven by the mining regions, especially Queensland and Western Australia. Although reported conditions remain below the non-mining states, the improvement has been stark, and the differential between the two parts of the economy has closed significantly. Although capacity utilisation eased slightly in the June, it has been trending steadily higher, and suggests that the outlook for employment remains solid.
Paul Brennan, Citi:
The RBA should feel encouraged by the latest NAB survey, which continues to show resilient business conditions and confidence despite the weakness in the national accounts. Improvements in price measures such as labour cost and price of final products also point to some comfort to the RBA that inflation might gradually pick up.
Ben Jarman, JPMorgan:
We are also treating the prevailing strong tone of the NAB survey with some caution given that the consumption outlook is challenged by rising mortgage costs, a lack of further flexibility in the saving rate, and rising household energy bills. NAB survey respondents also seem yet to reflect on the headwinds to profitability that will occur from the increase in their own energy input costs, a repricing even greater than that faced by household users.
Here's a recap of the session: shares are posting small gains in thin trading as investors await the start of major second-quarter US earnings reports and Federal Reserve chair Janet Yellen's congressional testimony later this week.
Miners are benefiting from a sustained rally in iron ore prices, as the most-traded iron ore on the Dalian Commodity Exchange rises another 2 per cent to hit a seven-week high of 489 yuan ($US71.86).
That combined with a rise in oil prices has helped push shares in BHP up as much as 1.2 per cent to a three-month high of $24.82. Rio has added 0.2 per cent, capped by a slump in the prices of base metals such as copper, while Fortescue is up 2.1 per cent.
The slight rise in oil prices has fuelled further share-price gains for stocks of oil and gas majors, with sector bellwether Woodside Petroleum up 0.3 per cent and fuel supplier Caltex Australia 0.2 per cent higher.
The big four banks have climbed between 0.2 and 0.6 per cent, recovering from early losses.
Volumes across the board are expected to remain weak as investors watch for Yellen's monetary policy testimony on Wednesday and Thursday for clues on when the Fed will again tighten US monetary policy.
"Most people have positioned their portfolios ahead of this (Yellen's testimony) and very few people are prepared to react if she does really go into little more depth about her own personal views on financial conditions," said Chris Weston, an institutional dealer with IG Markets.
"Her views at the moment are well known to the market and it shouldn't be too surprised by what she's saying now."
Complaints against Bellamy's new Victorian cannery by Chinese authorities have shattered hopes that the organic milk formula group has put its problems with China behind it, the AFR's Mike Smith writes:
Bellamy's has done the right thing suspending its shares until it can sort out its latest hiccup in China but the damage has already been done.
Once again, shareholders in the company are left in the dark as management struggles to get to the bottom of the Chinese authorities' issues with its new Camperdown Powder canning facility.
The company has suspended trading its shares for up to two weeks in a move which will remind investors of the unusually long trading halt they endured late last year.
The move continues a horror run for Bellamy's investors and is a further remainder of the risks for Australian companies doing business in China. Chinese authorities last week suspended the import licence for Bellamy's new Camperdown Power facility just days after it competed its acquisition of the facility.
While the latest issue around the licence for the Camperdown facility, which currently only makes third party products, does not look as serious as the problems the company faced last year as it battled for its survival, it is worrying.
It will further undermine confidence in the company which is making a habit of being caught up by unexpected regulatory and other hurdles in China.
Solid jobs growth, surging house prices and still, commodity dependent. Yet Canada is poised to diverge from Australia this week with the Bank of Canada set to lift interest rates for the first time in seven years, perhaps the first of two increases this year, amid heightening confidence in that nation's economic outlook and the global economy too.
The final domino fell over the weekend when a government report showed that the Canadian economy added 45,300 jobs last month, far more than forecasts calling for an increase of 10,000. It would appear that Canada has recovered from the darkest days of the oil-price shock.
The new hires made the three months ended June the fourth consecutive quarter of strong employment growth and the largest quarterly increase since 2010. In the second quarter of 2017, overall employment grew by 103,000 or 0.6 per cent.
Bank of Canada governor Stephen Poloz and two colleagues had signalled their optimism ahead of the labour data, and investors extended their bets over the weekend.
Trading in overnight swaps betting on a rate hike at tomorrow's policy gathering in Ottawa reached 94 per cent; the odds were about 5 per cent a month ago. Citigroup has gone as far as to forecast a rate hike this week and a second one in October.
Gross domestic product expanded 0.2 per cent in April, the sixth month of consecutive gains, widening the expansion over the previous 12 months to 3.3 per cent. Canada's economy grew at an annualised rate of 3.7 per cent in the first quarter of 2017, the best performer among the G7.
In a survey released June 30, the Bank of Canada said "business activity is continuing to gain momentum, buoyed by indications that domestic demand will improve further. Positive business prospects are increasingly widespread across regions and sectors".
Financial markets no longer make sense to macro managers like Mark Spindel.
After spending three decades focusing on things like economic trends, currency moves, politics and policy, Spindel has been confounded by markets shaped by low volatility, algorithms and more. He finally gave up and closed his nine-year-old hedge fund.
"I felt the intensity of following markets at a time of increasing political and economic confusion very hard," said Spindel, founder of Potomac River Capital in Washington. "My entire career had centred on an understanding of monetary politics and I had trouble getting my head around it all. It was exhausting."
These are troubled – and troubling – times for macro managers, those figurative heirs of famed investor George Soros who were once dubbed the masters of the universe. They've barely made money this year and once again, their returns pale next to those of cheaper index funds. Many investors are looking elsewhere.
Andrew Law at Caxton Associates has posted record losses. Alan Howard had the worst first-half in his hedge fund's history. Even the old hands in the business such as Louis Bacon haven't been spared from losing money. And Soros's son, Robert, conceded last month that his family firm has made fewer macro bets amid "lacklustre" opportunities.
It's enough to make a macro man wonder: in an age of untested central bank measures and algorithms, can this classic hedge fund style pay off like it used to?
The old guard made their fortunes when markets were more opaque, less efficient and when they had access to market information privy only to a few. Price trends were easier to latch onto, leverage heavily used and competitors fewer.
Today, funds face an onslaught of technology that's disseminating information more quickly and widely, while some algorithms are able to spot – and capture – price anomalies almost instantly. And computer models can more cheaply follow market trends.
In another bit of economic data, tighter lending standards for housing investors are starting to take their toll.
The number of home loan approvals rose 1.0 per cent in May, missing market expectations for an increase of 1.5 per cent.
The lower figure was mainly due to loans for investment housing declining 1.4 per cent over the month, while loans approved for owner-occupied housing rose 2.9 per cent.
New dwelling purchases by homebuyers at levels not seen since ye olde days of stimulus pic.twitter.com/0FuMIsS2cU
— Pete Wargent (@PeteWargent) July 11, 2017
The value of total housing finance rose 1.3 per cent to $33.03 billion in the month, seasonally adjusted, according to the ABS.
Banks have been lifting mortgage rates on interest-only loans to meet APRA requirements aiming to cool a boom in investor lending.
A measure of business conditions climbed to its highest since early 2008 in June as sales and profits picked up across a range of industries, another sign the economy had regained its feet after stumbling early in the year.
NAB surveyed more than 400 firms to compile its index of business conditions which rose 4 points to +15 in June, and far above the long-run average of +5.
The survey's measure of business confidence added 1 point to +9, again beating the long-run average.
"Most industries are performing well in the survey, which reflects positively on the broader economic environment," said NAB chief economist, Alan Oster.
"The lift in conditions was largely driven by stronger trading conditions and profitability, suggesting a much needed lift in demand, while employment conditions were steady."
The run of upbeat surveys holds out hope for a bounce in economic activity after bad weather kept growth to just 0.3 per cent in the first quarter.
The Reserve Bank argued that growth would revive when it held interest rates steady at 1.5 per cent following a policy meeting last week.
The survey's measure of sales jumped 6 points to a very strong +21 in June, while business profits rose 5 points to +15. Its measure of employment held steady at +7, again above average.
NAB said that outcome was consistent with annual job creation of around 240,000, or around 20,000 per month, and was enough to nudge the unemployment rate lower from the current level of 5.5 per cent.
Forward orders also added a point to +4, suggesting the improvement in demand could have legs.
There was little sign of inflationary pressure in the survey, with labour costs subdued. Retail prices turned higher after a drop in May, though were still growing at a modest 0.5 percent for the second quarter as a whole.
Cryptocurrencies and the price of ether continue to bleed this week, as traders position themselves for what could be the biggest event trade in cryptocurrency history: a change in the Bitcoin software.
On July 21, a new type of software called SegWit2x will be rolled out and depending on which bitcoin miners - those with the computing power who verify the legitimacy of the blockchain - accept it, bitcoin could be in for some serious price adjustments.
Bitcoin slumped 4.5 per cent to $US2,520 a coin overnight, with its fellow crypto-assets are suffering a much more pronounced selloff.
Ether, which enjoyed a hefty bull-run last month, has been in virtual freefall, plummeting 8 per cent to extend a 22 per cent fall in the last week.
Ethereum is a blockchain network allowing the transference of smart contracts; these contracts are legitimised by the the ether token. From a high of $US414, ether is currently fetching $US224 a token.
"People are getting the hell out of ether at the moment, they don't really know how this software fork will play out," said one trader.
SegWit2x is a software compromise between two warring factions within the cryptocurrency community. It is an extension in the size of the blockchain - which has struggled to cope with the increasing number of transactions and seen processing fees soar- and also paves the way for some of the workload to be spread across other, emerging protocols.
Slater and Gordon shares have jumped 8.1 per cent to 8 cents after the beleaguered law firm reached a $36.5 million settlement with shareholders, a move that will pave the way for the group's restructure.
Slater and Gordon's insurers will tip in $32.5 million of the settlement while the hedge funds that hold the debt in the group, which will be swapped for equity through the restructure, will contribute $4 million to the settlement.
The settlement is dependent on court approval and the recapitalisation scheme of the group going through.
The settlement will take in shareholders in all current claims against Slater and Gordon. The bulk is expected to go to investors signed up to the Maurice Blackburn claim.
It comes after two years of financial strife for the once-great legal institution. The restructure was dependent on the class action being settled.
Shareholders launched the class action against Slater and Gordon after its disastrous acquisition of British firm Quindell led to $1 billion-plus write-downs, a string of financial losses and a major investigation by ASIC.
Slater and Gordon's shares were worth more than $8 in 2015.
Vocus has received a $3.50/share takeover bid from Asian private equity firm Affinity Equity Partners, matching a similar indicative offer from KKR.
Both bids value Vocus, which has expanded to become Australia's fourth-biggest telecommunications company through a series of mergers and acquisitions, at $3.3 billion - $2.2 billion in equity and $1.1 billion in Vocus' debt.
Vocus said it will allow both private equity firms to conduct due diligence on a non-exclusive basis with a view to reaching a binding takeover offer.
Industry sources told the AFR's Street Talk column that Affinity was likely waiting to see whether KKR's $3.50 per share bid was enough to get the Vocus board to let them let.
Shares have been halted for a takeover adjustment and closed yesterday at $3.45.
Shares have opened slightly lower, with most sectors in the red apart from materials after commodity prices rose overnight.
Led lower by a 1.3 per cent drop in CSL, the ASX is down 0.25 per cent at 5710.3 points.
Among the miners, BHP is up 0.5 per cent, Fortescue has added 1.9 per cent and Oz Minerals has gained 2.2 per cent.
The major banks are all slightly lower while Telstra is trading flat.
A2Milk is the best performer among the top 200, rising 4.6 per cent in the wake of similar gains of the dual-listed stock in New Zealand.
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