Dollar higher after US job figures

THE Australian dollar has pushed above 103 US cents on news of improvements in the US jobs market.

At 0700 AEST today, the currency was trading at 103.08 US cents, up half a cent from 102.54 US cents on Friday afternoon.

BK Asset Management managing director Kathy Lien said the Australian dollar rallied on Friday night after US economic data showed the country's unemployment rate fell 0.1 per cent to 7.5 per cent in April.

The figures were better than markets had expected and saw US stocks rally sharply, with the Dow Jones Industrial Average pushing above 15,000 points for the first time in its history. However, it dropped back to close at 14,973.96

But, Ms Lien, said the currency continued to face downward pressure amid speculation the Reserve Bank of Australia could cut the cash rate, currently at three per cent, when it meets on Tuesday.

She said that even with Friday night's rally, the Australian dollar finished below where it started the week and could suffer further weakness over the next few days.

Australian retail sales, trade and employment data this week could weigh on the currency, she added.

"We are looking for softer numbers all round which may make it very difficult for (the Australian dollar) rally to extend above 104 US cents," she said.

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Dollar lower after US stocks fall

THE Australian dollar hit a five-week low as a combinations of factors drove US and European stocks lower.

At 0700 AEST today, the local unit was trading at 102.97 US cents, down from 103.63 cents yesterday.

Early this morning (AEST), the Australian dollar reached 102.77 US cents, the currency's lowest level since March 12.

Westpac New Zealand senior market strategist Imre Speizer said investors moved out of riskier assets overnight, which drove stock markets and the Australian dollar lower.

"A part explanation would be disappointing US company reports," Mr Speizer said from Auckland.

"The gold price fell a bit but not much, the other commodities fell, notably copper."

The euro posted a two-week low against the US dollar of 130.02 US cent in overnight trade.

Mr Speizer said the euro's decline came after Jens Weidmann, a member of the European Central Bank's governing council, said interest rate could be further cut if conditions in the euro zone worsened.

It also put downward pressure on the Australian dollar.

Mr Speizer said he expected the Australian dollar to trade in a range between 102.50 US cents and 103.40 cents during today's local session.

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Market opens lower after Wall St falls

THE Australian stock market looks set to open lower after a negative finish on Wall Street and slumping commodities prices.

At 0709 AEST today, the June share price index futures contract was 33 points lower at 4,969 points, with 4,420 contracts traded.

In New York yesterday, the Dow Jones Industrial Average fell 0.94 per cent to 14,618.59 points, while the broad-based S&P500 slid 1.43 per cent to 1,552.01.

Meanwhile, the tech-heavy Nasdaq Composite Index ended down 1.84 per cent at 3,204.67.

Futures contract prices for key commodities such as oil, gold and copper all settled lower in offshore trading.

In economics news on Thursday, the NAB business survey for the March quarter will be released.

Also, the Australian government will auction $1 billion of Treasury Notes.

In companies news, quarterly production reports from Fortescue Metals Group, Woodside Petroleum and Iluka are due for release.

Bank of Queensland and Australian Pharmaceutical Industries publish their interim results, while Wesfarmers will release third quarter retail sales figures.

Today, the benchmark S&P/ASX200 index rose 1.09 per cent to 5004.6 points, while the broader All Ordinaries finished 1.00 per cent higher at 4,993.6 points.

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Business as usual for miners after WA poll

AUSTRALIA'S biggest resources companies will continue to enjoy the support of a conservative West Australian government, industry commentators say.

They say WA's strong economy and Premier Colin Barnett's opposition to the federal government's mining tax will ensure that the two groups work closely together over the next four years.

The Liberals, who will once again form a coalition with the Nationals in WA, have kept all of the 24 seats they won at the 2008 election and secured at least a further seven seats at Saturday's election.

CommSec chief economist Craig James said there would be no change for business in terms of the new regime.

"I would presume it's going to be business as usual for the mining sector and business as usual for the West Australian community as a whole," Mr James said.

"No doubt it wasn't just state issues that determined the result."

AMP Capital economist Shane Oliver said the new government would most likely continue down the same path.

"It's really more of the same," Mr Oliver said.

"I don't think the WA government is a negative for business, it's probably a positive."

He said WA's economy had been performing well and voters were happy with the government.

"It's relatively business friendly."

Western Australia's Chamber of Minerals and Energy (CME) said it looked forward to working with the Barnett Government to implement commitments such as the replacement of the Department of Environment and Conservation with a parks authority and the expansion of the Department of Mines and Petroleum's approvals tracking scheme.

"The resource sector welcomed the premier strongly ruling out additional levies and taxes on the resource sector," CME said.

Mr Barnett has not indicated who will take on the portfolio of WA mines minister following the recent retirement of Norman Moore.

Resources companies BHP Billiton, Rio Tinto, Woodside Petroleum and Fortescue Metals Group declined to comment on the implication of the election result.

Meanwhile, accounting firm Pitcher Partners said while Mr Barnett had been passionate in his opposition to the mining tax, his concerns could either escalate sharply or diminish altogether as a result of the senate inquiry into the tax.

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Groupon fires CEO after share plunge

Source: AFP

GROUPON says it's replacing chief executive Andrew Mason, who says he's been fired, following the struggling daily deals firm's share price plunge of 24 per cent after bad quarterly results.

The company says executive chairman Eric Lefkofsky and vice chairman Ted Leonsis will take over the post of chief executive, effective immediately, and Groupon "will continue to invest in growth."

The board thanked Mason, a founder of Groupon, and said it was searching for a new chief executive.

"Andrew helped invent the daily deals space, leading Groupon to become one of the fastest growing companies in history," said Lefkofsky on Thursday.

Leonsis said: "Groupon will continue to invest in growth, and we are confident that with our deep management team and market-leading position, the company is well positioned for the future."

Mason, in a letter to employees, said he was "fired" but remained upbeat about the company.

"I love Groupon, and I'm terribly proud of what we've created," Mason said.

"I'm OK with having failed at this part of the journey.

"If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through."

Sentiment has been souring on Groupon, which made a splash with its 2011 stock market debut but has been dogged by fears of "deal fatigue," and worries about its profitability as well as accounting questions.

"We believe uncertainties with Groupon remain due to staff turnover, competition, and increased investments," said a note earlier Thursday from Edward Woo at Ascendiant Capital Markets.

"In our view, the slowing growth and weak margins are likely to bolster continued scepticism as to Groupon's valuation, growth prospects, and profit potential."

Groupon's shares slumped to $US4.53 at Thursday's close, a 77 per cent drop from its public offering price of $US20 in November 2011.

Scott Devitt at Morgan Stanley said Groupon's mission appears muddled now that it has moved into new services such as direct sales to consumers, and not just coupons for discounts with merchants.

"We continue to believe Groupon is a local ecommerce leader. However, we remain on the sidelines as the company experiments with myriad operating levers and strategies," the analyst said.

"We would become more constructive on the stock if we could better understand Groupon's ability to integrate the product companies it has acquired with the internally developed projects.

The Chicago-based firm reported a loss of $US81 million ($A79.74 million) in the fourth quarter and a $US67 million dollar deficit for the full year.

The loss translated to 12 US cents per share in the quarter, compared with expectations of a profit of three cents a share.

With the daily deals sector fading fast, Groupon also offered a weak revenue outlook of $US560 million to $US610 million, well below market expectations of $US650 million.

Groupon shares were listed on the Nasdaq in 2011 in a blockbuster public offering that raised $US700 million and triggered fears that investors were overvaluing hot internet startups.

The troubles at Groupon come amid ongoing woes at number two sector member LivingSocial which is also losing money.

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Super Thursday not super after all

Source: The Australian

THE profit season's biggest reporting day - Super Thursday - turned into the worst day on the stock market in almost nine months with about $35 billion wiped off the value of corporate Australia.

Concerns about the US outlook, a squeeze on global liquidity, slowing profit growth among Australian companies and the axing of around 1700 jobs sent investors running for cover yesterday.

And the market crashed back below the 5000 point threshold that was passed with much fanfare only a week ago.

Investors were initially spooked by comments overnight from the US Federal Reserve that it would review its stimulus program next month.

It was the huge surge in global liquidity that was the key driving force behind the return of the bull market with stocks up 20 per cent from its previous lows.

The Australian stock market last month registered the second biggest monthly gains in January since 1994.

But analysts said the good news for concerned mum and dad investors, who have recently returned to the equity market, is that over the past 30 years, when the market does well in January, it finishes the year in positive territory 70 per cent of the time.

Traders however warned the pullback was "just what a lot of people have been waiting for" as many people felt the recent run was a bit too much.

IG Markets strategist Stan Shamu said there was "no real bounce" in markets with short sellers to the fore.

Reporting half-year results, ASX chief executive Elmer Funke Kupper was upbeat that the greater level of stability is making the global economic recovery become possible.

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Iluka to cut 200 cuts after profit slide

MINERAL sands miner Iluka will axe 200 jobs as it seeks to rein in costs after reporting a 33 per cent slide in full year profit.

Iluka's net profit fell to $363.2 million in 2012 from $541.8 million the previous year.

Revenues dropped to $1.2 billion from $1.6 billion.

Iluka slashed its fully-franked final dividend to 10 cents a share from 55 cents.

Managing director David Robb outlined a series of fresh measures to curtail production and cut costs in 2013, including the loss of 200 jobs.

"As part of the measures outlined, approximately 200 positions within Australian operations will be made redundant, with additional actions in train to reduce costs in corporate, support and contracting areas," he said today. "The actions to curtail production are being implemented as a consequence of the weak market conditions which prevailed in 2012 and resulted in Iluka production volumes exceeding sales for the year."

"While measures were taken to curtail production in 2012, prudent planning for a gradual recovery in demand through 2013 means that further actions to reduce production and lower costs are necessary."

Iluka announced in January plans to cut production and cut jobs after tough trading conditions led to a loss of nearly one-third in revenue during 2012.

At the time, its said its Eneabba operations in mid-west Western Australia will be idled from April, costing 65 jobs.

Other operations in WA, South Australia, Victoria and in the US were also to be idled or operated on reduced rosters.

Mr Robb said the further measures being taken included halving the combined production of zircon, rutile and synthetic rutile.

Total cash production costs would be cut to about $375 million from $583 million through idling operations, reducing employment levels and other actions.

About $50 million would be set aside for restructure and redundancy costs.

Capital expenditure will also fall in 2013 to about $100 million from $167 million.

Mr Robb said there has been some positive, early indications for improved demand in 2013 for Iluka's main products, suggesting a turning point in the current mineral sands business cycle may be near.

Iluka's shares were steady at $10.35 at 10.57am AEDT.

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Dollar drops one cent after Fed minutes

THE Australian dollar has fallen more than one US cent as it looks likely there could be an early end to the US Federal Reserve's stimulus program.

At 7am AEDT today, the local unit was trading at 102.44 US cents, down from 103.65 cents yesterday.

The currency reached an overnight low of 102.43, its weakest level since Tuesday of last week.

The minutes of the Fed's January policy meeting show that some members were worried that the bond-buying programs could eventually escalate inflation and unsettle financial markets.

BK Asset Management managing director Kathy Lien said the US dollar rallied against all the major currencies after the remarks were released.

"The real reason (the Fed) is considering an end to the program is because they see a significant improvement in the labour market," she said from New York.

Ms Lien also said the Australian dollar was one of the hardest hit because the Reserve Bank of Australia's (RBA) monetary policy stance was in stark contrast to what the US Federal Reserve was now considering.

"Australia is looking at the possibility of cutting the interest rate next month and the US is looking at the possibility of unwinding some of this emergency stimulus," she said.

Tomorrow, RBA governor Glenn Stevens will appear before the House of Representatives committee. Ms Lien said the testimony has become more important after the release of the US central bank's January minutes.

"The Aussie dollar has fallen quite a bit, much more than the euro, the yen or the Canadian dollar," she said. "The reason for that is because the RBA is looking at the possibility of easing."

"If the governor confirms this, that would compound the losses and could take the Aussie dollar to a level below 102.00 US cents."

Ms Lien said she expected the Australian dollar to trade in a range between 101.75 US cents and 102.75 cents today.

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Dollar higher after upbeat RBA minutes

THE Australian dollar is a quarter of a US cent higher after the central bank released the minutes of its February board meeting.

At 12pm AEDT today, the local unit was trading at 103.25 US cents, up from 102.95 cents yesterday.

The Reserve Bank of Australia (RBA) kept the cash rate at three per cent at its first meeting of the year, after cutting it by a quarter of a percentage point at the previous meeting in December. The RBA minutes indicated the bank would wait to see how recent interest rate cuts flowed through the economy before deciding if it needed to cut the cash rate further in 2013.

Easy Forex currency dealer Tony Darvall said the minutes were generally positive and spoke about the stabilisation of the Chinese economy.

"They talked about stronger domestic demand across Asia. They're pretty strong comments," he said. "Also, that the iron ore price has increased, which is going to help."

"They weren't focusing on the rate cuts or the downside to the economy."

Mr Darvall said the next focus for currency markets would be RBA Governor Glenn Steven's testimony before a parliamentary committee on Friday.

"They will grill him on the high value of the Aussie dollar, that's for sure," he said. "Our central bank is very independent compared to most countries, and the bar for intervention (in currency markets) has been set very high. At 110.00 US cents they weren't intervening or even talking about it."

Mr Darvall said he expected the Australian dollar to trade in a range between 103.10 US cents and 103.40 cents this afternoon.

Meanwhile, the Australian bond market was weaker. At 12pm AEDT today, the March 10-year bond futures contract was trading at 96.445 (implying a yield of 3.555 per cent), down from 96.465 (3.535 per cent) yesterday. The March three-year bond futures contract was at 97.080 (2.920 per cent), down from 97.100 (2.900 per cent).

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