Markets Live: Stocks hang onto gains The Gove alumina refinery owned by Rio Tinto could be left looking for new sources of fuel to stay in business after the Northern Territory government said it would not back a proposed deal to supply the gas. Earlier this year, the government offered 300 petajoules of gas over 10 years from its domestic supply source to save the loss-making refinery, operated by Rio Tinto subsidiary Pacific Aluminium. Rio Tinto threatened to close the refinery due to high operating costs and market pressures unless it could find sources to replace expensive diesel with natural gas. "The original proposal by Pacific Aluminium was always conditional on a rigorous due diligence process and unfortunately the results have revealed unacceptable risk to the NT economy and taxpayers," Northern Territory Chief Minister Adam Giles said. 4:56pm: More cost cutting in mining: Anglo American, in the first set of earnings released under its new chief executive, has vowed to slash spending and boost cash flow by $US1.3 billion a year by 2016 as it reported a 15 per cent drop in first-half profit. Anglo, the first of the diversified majors to publish results, said underlying operating profit fell in the six months to $US3.3 billion, ahead of a consensus estimate of $US3.12 billion. Underlying earnings per share (EPS) came to $US0.98. Anglo, the smallest of the major diversified miners, has underperformed its peers such as BHP and Rio for much of the past decade, most recently battling labour unrest in South Africa, where it generates half its earnings, and multi-billion dollar cost overruns in Brazil. Mark Cutifani, who joined the miner in April from AngloGold, has been reviewing the business over the past four months. Though investors had not expected a quick fix, they had hoped the new boss would lay out his vision. "Preliminary feedback also indicates that we do not require wholesale change to our portfolio," Cutifani said in a statement today. But we do need to become much more disciplined, more effective and more efficient to drive a step change in delivery to extract greater value and returns for our shareholders. 4:11pm: Toyota has shrugged off China sales woes to stay the world's top selling automaker for the first half of this year, outpacing General Motors. Toyota said today it sold 4.91 million cars and trucks around the world for the January-June period, down 1.2 per cent from the previous year. GM said earlier this month it sold 4.85 million vehicles worldwide in the six months, growing almost 4 per cent as it gained US sales faster than Toyota. Toyota's sales in China were hurt by anti-Japanese sentiment that flared last year over a territorial dispute, setting off boycotts and riots. But the Japanese automaker stayed ahead of GM in other regions. 4:10pm: Gina Rinehart turned down a loan of about $400 million from ANZ to fund her equity stake in a mine development, said a person familiar with the matter, Bloomberg reports. The loan, offered to finance part of Rinehart's investment in the $10 billion Roy Hill iron ore mine in Western Australia, was never utilised, said the person, who asked not to be identified because the details are private. The project is receiving sufficient funding from equity partners and financing talks are expected to be completed this year, Roy Hill spokesman Darryl Hockey said in a telephone interview. Rinehart, the world's 38th-richest person, is seeking to arrange funding for the mine, rail and port in Australia's remote north, as costs peak and prices drop amid forecasts of a global supply glut. Roy Hill is in talks with export credit agencies and commercial banks to raise debt for the project. Ayesha de Kretser, a Melbourne-based spokeswoman for ANZ, declined to comment. Rinehart's Hancock Prospecting Pty owns 70 per cent of the project in the Pilbara region, due to start in 2014, with the balance owned by South Korean's Posco, Japan's Marubeni Corp and Taiwan's China Steel Corp. Hancock plans to produce 55 million metric tons a year at Roy Hill over 28 years. 4:08pm: US gold miner Newmont has made heavy write-offs against its Australian mines - Boddington and Tanami - totalling $US1.5 billion following the slump in the gold price. The write-offs, which total $US2 billion, come as other global gold miners such as Gold Corp have also made heavy write-offs and provisions against some of their higher cost mines amid pessimism over the near term outlook for the gold price. 3:54pm: The Ten Network has renewed its agreement with Southern Cross Media, the television broadcaster says. The three-year deal was announced to the ASX in a brief statement this afternoon. No other details were supplied. "After constructive discussions with Max Moore-Wilton and his team, we have collectively achieved a fair outcome for both companies," Ten's chief executive Hamish McLennan said. We look forward to the continuation of our partnership with Southern Cross Media. The chairman of Southern Cross Media, Mr Moore Wilton, said he was looking forward to a stronger collaboration "focused on improving Ten's national audience share and revenue-generating opportunities." Ten's share price slipped slightly following the announcement but rebounded and was trading at 27 cents, yesterday's close, about 3.50pm. Southern Cross shares rose slightly but fall shortly after. They was trading at $1.48 about 3.50pm. 3:40pm: Some more from Goldman Sachs supremo Lloyd Blankfein, who was speaking in Sydney earlier today, offering his view on everything from US politics to the global economy. During the question and answer session, Blankfein was told that some commentators in Australia saw the political situation in the US as being "almost as dysfunctional as ours." Blankfein responded, showing his sense of humour: "I've been coming here for a long, long time, and during the last two decades of growth, growth, growth, and people are always distraught, overwrought, wringing their hands about how horrible things are and to my observation, they don't look that bad," he said to laughter from the audience. "No it's awful," Blankfein said. 3:26pm: We flagged earlier this week on this blog about another possible debt ceiling stoush in the US. Here's a bit more detail and analysis on that. While analysts are not predicting catastrophe, they have several reasons to worry that the conflict just weeks away could be even worse than usual. The timing is particularly bad, they say, because the political climate in Washington is unusually frayed by a host of tangential issues not present in previous battles. US President Barack Obama and Congress face two fiscal deadlines in quick succession. They must agree by October 1 on a stop-gap measure to keep the government funded or face a shutdown. And in early November, Congress must raise the legal limit on the country's borrowing authority or risk an unprecedented default on the government's debt, a much more consequential event than a shutdown because of its potential to cause chaos in financial markets and harm the economy. This time around, the Republicans, who control the US House of Representatives, are expected to use the deadlines as they have in the past as leverage to extract spending reductions from President Barack Obama. 3:12pm: If you're not particularly keen on the outlook for the Australian market, when looking offshore, Europe may offer more value when compared with the US, according to the managers at Templeton Global Growth Fund. Even though it has a little over a third of its assets in the US, it reckons the risk-reward ratio is better tilted in Europe. It has 10 per cent of its assets in each of France and the UK, with another 5-odd per cent in each of the Netherlands, Switzerland and Germany. "Peak-to-trough market declines in peripheral Europe averaged -71 per cent in the aftermath of the global financial crisis with attrition as bad as the Nikkei Index (-78 per cent) in the early '90s and the NASDAQ in the early '00s (-74 per cent)," it told investors in a monthly report today. Accordingly, there is potential value on offer. And while Japan may attract some interest, it remains wary. "Our main concern is that reform will stop shy of the structural changes needed for corporate Japan to gain competitiveness and improve profitability," it told investors. At 26x last year's earnings, the Nikkei is one of the most expensive developed markets in the world on economic cash flows. 3:03pm: Meanwhile in Asia, Asian stocks have fallen, with the regional benchmark index paring its longest weekly winning streak since January. Japanese shares headed for the biggest loss in six weeks ahead of the busiest week of earnings. Toyota, a Japanese car-maker that gets 31 per cent of its revenue in North America, declined 2.8 percent after the yen rose against the dollar. Advantest slumped 9.9 per cent in Tokyo after the chip-equipment maker posted a 3.6 billion yen ($40 million) quarterly loss. China's Shanghai Composite Index fell after the government ordered companies to cut excess production capacity, part of efforts to create sustainable growth. The MSCI Asia Pacific Index lost 0.5 per cent to 135.49 as of 1pm in Tokyo, with about five stocks dropping for every three that rose. The measure has gained 0.4 per cent this week, heading for a five-week advance. US data showed mixed clues as to when the Federal Reserve may taper stimulus. 2:50pm: Shares in Perth-based liquefied natural gas company LNG Ltd have soared after it secured funding for its plant in the United States. US investment firm Stonepeak has agreed to provide the full $US660 million ($718.25 million) of project equity finance needed to develop LNG's Magnolia project in Louisiana, in exchange for a stake of about 50 per cent in the plant. The project has a total estimated cost of $US2.2 billion. LNG shares were up 5.5 cents, or 26 per cent, at 26.5 cents at 1.30pm AEST. LNG is also developing a plant at the port of Gladstone in Queensland. 2:22pm: Holden and Victorian unions are working through negotiations to meet a redundancy quota of 100, but Fairfax Media understands only 40 workers have expressed interest in the scheme. The redundancy stalemate comes as 400 manufacturing workers at Holden's Elizabeth plant clock-off for the final time today, as part of the same cost saving measures announced by Holden in April. The changes will see Holden's manufacturing workforce whittled down to 1700, coinciding with car maker's production already being reduced from 400 cars per day to 335. Australian Manufacturing Workers Union SA secretary John Camillo says forced redundancy is a distinct possibility for some Victorian staff. I don't think they've reached their target so Holden may be forced to look at forced redundancy. 2:04pm: The loss of access to water supply in four years has forced BHP Billiton and Rio Tinto, as the owners of the world's largest copper mines, the Escondida project in Chile, to spend $US3.4 billion on a water plant, at a time when mining companies globally are curtailing capital spending. BHP's share of the new round of investment is estimated at $US1.97 billion and Rio's at $US1.03 billion. Construction on the planned desalination plant is to begin immediately, with completion planned for 2017. The large capital spending commitment comes as the partners are in the middle of a $US4.5 billion round of spending which is to be completed during 2014, primarily on a new ore concentrator at the project, together with ancillary upgrades. ""This investment was well flagged on the site visit to Escondida in October 2012,"" Deutsche Bank analyst Paul Young said, ""however the timing is a little earlier than we had expected. ""The critical path is the expiry of the local aquifer leases in 2017 which currently supply 75 per cent of the mine's water."" 1:41pm: A small office fund, Centuria Property Trust, is looking to raise $312.5 million through a public float, with its seed asset being the Northpoint tower at 100 Miller Street, North Sydney. The former head of Mirvac, Nick Collishaw, will be the trust's chief executive and has forecast 2014 financial year annualised distribution payout ratio of 95.9 per cent, resulting in a 2014 forecast annualised distribution yield of 7.80 per cent, with 48 per cent of the 2014 forecast distribution tax deferred. Tower Holdings, the diversified private investment group of the developer, Terry Agnew, will be a strategic property investor, whose assets include 185 Macquarie Street, Sydney and Great Keppel Island. Agnew said Tower would be utilising part of the proceeds from the sale of Northpoint for other investment and development activities. 1:19pm: Thank the banks for today's modest gains, says Australian Stock Report analyst Benny Sada. ""It's definitely the financials that are keeping the market in positive territory,"" said Mr Sada. The four major banks were all higher, with Westpac the best performer, up 56 cents at $30.62. ANZ was up 39 cents at $29.51, National Bank was 27 cents higher at $31.14, while the Commonwealth Bank was up 12.5 cents at $73.6. Mr Sada said investors were buoyed by Macquarie Group's expectations of rising profit in the current fiscal year, announced at its annual general meeting on Thursday. ""It's led investors to the financial sector today,"" he said. ""We have strength in the energy and financial space, which is countered by weakness in the resource stocks, as well as Telstra."" He said he believed the market was consolidating, rather than accelerating. ""The market needs a reason to go higher, and there's been a lack of reasons over the last couple of days."" 1:13pm: While all eyes will once again focus on US Federal Reserve Ben Bernanke and the next FOMC meeting early next week, opposition is already growing against one of his future replacements - former US Treasury Secretary Lawrence Summers. The outcry has come not from Republicans, but the left wing of the Democratic Party. Summers advised US President Barack Obama, was treasury secretary under former President Bill Clinton, led Harvard University and was chief economist for the World Bank. He helped tame the Asian financial crisis that threatened to sweep the globe under Clinton. But liberals blame him for spearheading financial deregulation that they charge helped create the financial crisis, and say his work at hedge fund D.E. Shaw makes him the epitome of a revolving door between Wall Street and government. Some powerful Democrats, including former Treasury Secretary and one-time Citigroup executive Robert Rubin, have been speaking up behind the scenes for Summers, according to multiple Reuters sources with close ties to the Fed or the White House. If Obama tapped Summers, he would be picking him over the Fed's current vice chair, Janet Yellen, who is seen as the other main candidate for the job. Both Yellen and Summers would be expected to hew fairly close to the policy course set by Bernanke. 1:08pm: You might have seen this item earlier today, but you might not have seen the update. Former Sydney Swans defender Leo Barry has moved from winning an AFL premiership medal to taking a financial markets award in the latest analyst and equities rankings compiled by markets consultant East Coles. Barry, who retired from the Swans at the end of 2009, that year joined the broking division of Bank of America Merrill Lynch. On Thursday night he took an East Coles award for best small and mid-cap dealer. Barry played more than 235 AFL games over a 14-year career and famously took a mark in the dying seconds of the 2005 grand final which helped secure a Swans victory. Among investment banks, UBS has again beaten rival firms to dominate the latest analyst and equities rankings compiled by markets consultant East Coles. Read the full story here, and you can read the full list of winners here. 12:54pm: Here's a little more on why Macquarie analysts have raised Westpac to outperform. While there has been a lot of market speculation around the potential for Westpac to cut its standard variable rate, which would cost it up to $300 million, and which has held the stock back, the analysts say they do not expect the bank to make drastic changes to their rate any time soon. "Instead they'll look to pull the many levers they have to get back to system growth, which won't affect profitability immediately or materially such as broker commissions and mortgage discounts," the analysts write in a note today. In addition, relatively speaking, the stock is likely to continue to win some friends towards the back end of the year as the economy slows given its safer asset mix. Shares are up 2.1 per cent at $30.68. 12:44pm: As we all know, McMillan Shakespeare's share price halved at one point yesterday as questions belatedly emerged as to how much of its profits came from these "novated" lease deals on employees' cars. It's up 7.4 per cent at at $9.44 today, but still nearly 50 per cent below the $18 it was trading at before the Treasurer came out with his plan to change fringe benefits tax. So what's it worth? One fund manager, who you should know owns McMillan (ASX: MMS) - in fact it is one of his bigger holdings - trumpeted what he terms the "Monte Carlo method" of valuing the stock. Monte Carlo is simply a valuation method used for option derivatives, which utilises probability principles. In this case, he cited Betfair and TAB's odds for a Liberal National Party victory later this year of 75 per cent; and the corresponding likelihood for a Labor victory of 25 per cent. This is important because if the Coalition win, Opposition Leader Tony Abbott said he would scrap the plans to restrict the use of novated leases, meaning it would be business as usual for McMillan. He comes up with a $13.50 valuation. First he takes a 14 per cent discount on the share-price high of $18.64, which gives you $16 if the LNP wins. You give this a 75 per cent probability. Then he takes an Armageddon scenario for the stock if Labor wins, which has it trading at $6.00. This gets a 25 per cent probability. You add them up, and voila, you get $13.50. 12:37pm: Finance group Yellow Brick Road has been caught offering loan advice without registering its corporate entities under the national credit licensing framework. The Australian Securities and Investments Commission said the group had authorised over 100 individuals working in branches as credit representatives, but had failed to register the companies that operate the branches, as per the framework. The corporate regulator said its concerns had prompted the group to now register its entities under the scheme. 12:20pm: In news local miners won't like, China has ordered more than 1400 companies in 19 industries to cut excess production capacity this year, part of efforts to shift toward slower, more- sustainable economic growth. Steel, ferroalloys, electrolytic aluminum, copper smelting, cement and paper are among areas affected, the Ministry of Industry and Information Technology said in a statement yesterday. Excess capacity must be idled by September and eliminated by year-end, the ministry said, identifying the production lines to be shut within factories. ""This detailed list shows the government is serious in its efforts to restructure the economy and is prepared to tolerate the necessary pain,"" says Zhang Zhiwei, chief China economist at Nomura. More than 92 million tonnes of excess cement capacity and about 7 million tonnes of excess steel production capacity are expected to be wiped out under the government's plan, Zhang notes. Nomura maintains its forecast of 7.4 per cent economic growth for China in this quarter and 7.2 per cent in the fourth quarter. 12:05pm: Goldman Sachs has had numerous PR disasters in recent years, and chief executive Lloyd Blankfein - who was speaking in Sydney earlier today (see 10.47am) - has been at the centre of some of them. In November 2009, Blankfein joked to the Times of London that he was just a banker "doing God's work." That was in the same year as Rolling Stone magazine described Goldman Sachs as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." For more famous Blankfein moments, click here. 11:24am: A bit more detail here on Sigma Pharmaceuticals which says it expects its earnings will be dragged down by initiatives such as setting up its online shopping. Sigma said costs from investing in key areas, such as its ""multi-channel"" retail strategy, will likely result in its first-half earnings being below those for the prior corresponding period. ""Trading in the first half has continued to be in line with expectations,"" the pharmaceuticals company said in a statement. ""Sales have been slightly stronger than last year and the impact is expected to flow through to gross profit. ""Notwithstanding the stronger gross profit, the reported first half EBIT (earnings before interest and taxation) result is likely to be below the prior corresponding period as a result of a higher cost base arising from investment in key areas of the business, including Multi Channel."" That said, Sigma expects its full-year earnings to increase over fiscal 2013. 11:21am: Fund manager Perpetual has blamed a weak local share market for a 2.7 per cent drop in its June quarter funds under management. The fall puts the group's portfolio for the period at $25.3 billion - down from $26 billion in the March quarter. Perpetual said the decrease was due in part to a lower domestic equities market, which it said ripped a $200 million chunk out of its portfolio. However, the group said this was partly offset by extra returns delivered by the majority of the group's Australian Equity funds. Perpetual also blamed net fund outflows for $500 million of its losses for the period. It said $200 million had been taken out of its equities asset class, and $200 million from its cash and fixed income asset class. Fund managers get a commission for the size of their portfolio, therefore a decrease in funds represents a smaller commission. Despite the quarterly fall, the group's funds increased on a year-on-year basis by 11.9 per cent - or $2.7 billion - from $22.6 billion in the previous year. Perpetual said its fund ratings for the quarter were strong, with its Diversified Funds and the Pure Equity Alpha Fund receiving upgrades and all other funds maintaining their ratings. Perpetual shares were down 1.2 per cent to $40.6 in early trade. 11:17am: It's been a pretty tough year for those long Coca-Cola Amatil shares with a profit warning in May pushing the scrip to around $12.50 from the $14.50 mark, where they've held since. The earnings pressure comes from discounting, and Citi told clients this morning that the worst may not be over. Even though Coke has matched some of the discounting from rival Pepsi, which has seen its share of the cola market edge up to 78 per cent, with the 12-month anniversary of Pepsi launching the discounting war looming, Citi warned that another leg down in cola prices is a "distinct possibility." August 2013 and September 2013 mark the anniversary of Pepsi's increase in discounting. We think there is a distinct possibility that in the face of tougher comparables Pepsi decides to take another step up in discounting," Citi wrote in a note this morning. We note that Pepsi's two-litre range of soft drinks has been placed on Everyday Value at Woolworths at two-thirds its previous price. Given ... losses and poor returns, economic justification for further discounts may not be a consideration and [Pepsi] appears focused on market share at any cost. Citi reckons that for patient Coca-Cola Amatil investors, Pepsi's discounting will have a limited life and "Coca Cola Amatil has upside from the roll-out of new coolers in the high margin non-grocery channel." 11:08am: Japanese shares are down, with the Topix index headed toward its first weekly drop in six weeks, as banks and papermakers led declines and after exporters slid as the yen held gains against the dollar. The Topix slid 1.9 per cent to 1,179.66, with all 33 industry groups falling. The index is on course for a 2.7 per cent decline this week, its first weekly drop since June 14. The Nikkei 225 Stock Average declined 1.9 per cent to 14,285.86. ""Japanese earnings are steadily recovering. However, a lot of them are coming in-line with expectations,"" said Juichi Wako, a Tokyo-based senior strategist at Nomura, the nation's biggest brokerage. ""It's not enough to be a big boost to the stock market."" 11:01am: RBS Morgans Ipswich manager Tony Russell says that after several days of gains, resource stocks were being sold as investors cashed in on recent rises. ""We've had a bit of a kick over the last week in the resource stocks, particularly BHP and Rio, mainly on the back of stronger iron ore prices and some more comforting growth estimates coming out of the China economy,"" he said. ""We've seen a small profit-taking on that basis."" BHP has lost 0.69 per cent to $34.53, Rio is down 0.43 per cent to $57.25 and Fortescue is 0.82 per cent $3.62. 10:52am: Gold headed for the longest weekly rally since March as US economic data backed the case for sustained monetary stimulus. Russia and Kazakhstan added bullion to reserves for a ninth month in June.Spot gold gained as much as 0.3 per cent to $US1,338.50 an ounce, and traded at $US1,334.55. Prices are 3 per cent higher this week after advancing to a one-month high of $US1,348.65 on July 24. Gold is up 8.1 per cent in July, heading for the best month since January 2012. "Gold advanced on expectations that the Fed will maintain stimulus measures after US jobless claims rose more than expected," Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an email today. 10:47am: A note from the US, where the political environment is still "very poisonous" at the moment, and confidence among chief executives is at a "low ebb," according to Goldman Sachs chief Lloyd Blankfein. But the world has been well-served by Ben Bernanke, the chairman of the US Federal Reserve, and his handling of the financial crisis, according to the Mr Blankfein, one of the most controversial figures in modern finance. He has been chief executive of Goldman Sachs during a notorious period. 10:39am: As the local market hops above the line into positive territory, the Australian dollar is headed for a second-straight weekly gain amid speculation US Fed next week will maintain bond purchases that have supported higher-yielding assets around the world. ""A lot will depend on how financial conditions evolve in the U.S. and whether the Fed looks to reduce its stimulus,"" said Peter Dragicevich, a Sydney-based currency economist at Commonwealth Bank of Australia, the nation's largest lender. ""We expect it will at some point in 2013, but there is a risk that it delays it by a meeting or two. We don't think the Aussie will fall too far."" Levels around 91.50 US cents could provide support to the Aussie in coming days, said Dragicevich, referring to an area where orders to buy may be clustered. The Aussie was little changed at 92.45 US cents, paring its weekly advance to 0.8 per cent. 10:30am: Yep, that arrow next to this post about McMillan Shakespeare is pointing up. After losing 42 per cent yesterday and 14 per cent on Tuesday last week, the last time they changed hands before being placed in a trading halt, shares in the salary packaging firm found some support in opening trade, gaining 10.9 per cent to $9.70. But as the trading halt lifted, shares in the company slumped than 50 per cent.