Markets Live: Chinese data lifts mood 2:41pm: With IAG and Suncorp enjoying surging profits in the latest half, executive pay at insurance companies is also growing at a healthy clip. That's the conclusion from new research from UBS analyst James Coghill. Ahead of the annual general meetings for tow two insurers next month, Coghill notes that total pay for senior executives rose 16.5 per cent at IAG and 5.2 per cent at Suncorp. Most of the gains came from higher bonuses rather than fixed pay - which was up about 2 per cent for both insurers. But while pay increased at both companies, it seems IAG was the more lucrative company to be a senior exec last financial year. Putting aside CEO pay, all seven other senior executives at IAG received more than $2.5 million in total remuneration, whereas several topi executives at Suncorp recived less than $2 million. 2:12pm: Coming back to purchasing power parity (PPP) and what is the fair value of the Australian dollar (see post from 12.15pm), another indicator that currency strategists use to get a gauge of how much the dollar has risen historically is the Bank for International Settlements' effective exchange rate indices. The data, which you can find here, looks at up to 61 currencies since the 1960s and uses weightings based on trade data in 2008 to 2010. RBS' senior currency strategist Greg Gibbs says the data shows the Australian dollar is still expensive. Looking at the economy, the industries outside the mining sector are still struggling despite record-low interest rates, he points out. If you had record interest rates and a currency that was somewhat average, you would anticipate that the economy would be grower much faster than it is. All the evidence would suggest that the currency is still restraining the economy," he says. So what factors will be key to determining where the currency should be in terms of fair value? Gibbs, who believes fair value for the Australian dollar could fall to around the low-80s against the US dollar, says key factors including the terms of trade, the end of the mining investment boom and the shift towards an increase in export volumes in the next phrase in the development of the resources sector. Also central to the dollar's movements is where the currency needs to be to regenerate employment in other sectors outside mining. 1:44pm: Macquarie Group in consortium with Dutch pension fund manager APG and, separately, the global asset management division of Swiss bank UBS, have made final bids for RiverCity Motorway, Reuters says quoting people familiar with the process. The business is expected to sell by the end of the week for more than $600 million. RiverCity operates a tunnel under the Brisbane river. RiverCity receiver KordaMentha and adviser Goldman Sachs were expected to have four bids on their desks by the end of the day, AFR's StreetTalk wrote this morning. Consortiums led by Abertis/ Hastings Funds Management, Access Capital, Queensland Motorways, and UBS Infrastructure Fund are expected to put forward offers, with the winner likely determined by who has the highest traffic forecasts, the column said. An outcome is expected within days, putting an end to RiverCity's sorry tale which has seen the company under receiver's instruction for more than 18 months 1:27pm: Time for a look around the region: Japan (Nikkei): closed Hong Kong: closed Shanghai: +0.6% Taiwan: +0.9% ]Korea: +0.3% Singapore: -0.7% New Zealand: -0.8% Bit of a mixed picture, but the Chinese manufacturing data did give regional markets a boost. ""It's an indication of a continuing expansion,"" says Hao Hong, Hong Kong-based strategist at Bank of Communications Co. ""As long as we continue to see economic expansion, the depressed expectations will continue to reverse and that is positive for the market."" Japan's market is closed today for a holiday, while trading on Hong Kong markets has been delayed due to a storm. 12:58pm: Taking a look at a few market movers, BHP is the biggest drag on the ASX200 today, responsible for a loss of 3.1 points, while Newcrest has pushed the market down 2.6 points. Woolworths and Wesfarmers are also weighing, taking 2.2 points and 1.8 points off the market respectively. While, Westpac and ANZ are the biggest buoys, adding 2.7 points and 1.2 points to the ASX. 12:39pm: Groundwater will be protected, the Queensland government says, after a new report warned of threats posed by new coal mines in the Galilee basin. ""It's no surprise that a report that's been commissioned by the Lock The Gate Alliance would come up with those types of assertions. I don't think it's necessarily so,"" Mr Cripps told the ABC. ""But what I can say, not having seen the report itself, is that there are very strict, very thorough processes in place for the assessments of projects."" 12:28pm: The Australian stock market is lower on rising speculation the Fed will begin tapering stimulus in October, but the market has trimmed some of its losses after stronger than expected Chinese manufacturing data. St Louis Fed president James Bullard's comments are weighing on investor sentiment, as they came only days after US Fed chairman Ben Bernanke suggested quantitative easing would continue, Australian Stock Report senior equities analyst Benny Sada says. ""That really sowed some confusion among investors,"" Sada says. ""That uncertainty is really weighing on our market today."" But resource stocks have recovered a bit after the HSBC Chinese purchasing managers" index showed preliminary manufacturing activity at a six-month high in September. ""It could play a part in arresting some of the decline in our mining sector,"" Sada says. 12:23pm: Today's young workers can expect to have an average $1.1 million in their superannuation by the time they retire but it won't be enough to maintain a comfortable post-work lifestyle. ""To afford a comfortable retirement standard covering life expectancy, a current 30-year-old male would need a retirement benefit in 2048 of $1.58 million and a female, $1.76 million,"" Mason says. IPad prices around the world 12:15pm: Australia's one of the cheapest places in the world to buy an iPad, according to a survey by CommSec. But is that an accurate indicator of whether the Australian dollar is fair value in terms of pricing? CommSec's chief economist Craig James says in a report today that according to current exchange rates, Australia is the fourth cheapest across 46 countries to buy a 16GB iPad with Retina display, behind Malaysia, Hong Kong and Japan. "The latest survey raises questions about whether the Aussie dollar is as over-valued as many analysts believe," James writes about the September survey, which compares the price of the iPad according to purchasing power parity. The Economist's Big Mac Index, which is seen as a rough long-term gauge of where currencies should be moving towards, saw the Australian dollar as near fair value in July, when it was around 90 US cents. Other economists say that the Australian dollar, if measured using PPP and looking at more regular consumer goods and services that Australians buy or use, still has some way to fall to reach fair value. Australia's very expensive. The level of the Australian dollar which would be fair from a PPP-perspective is around about 75 to 80 US cents," ANZ currency strategist Andrew Salter says. 12:00pm: Boart Longyear says it will reduce the size of its revolving credit facility from $US450 million to $US140 million. The world's largest drilling company said the change was subject to its completion of a $US300 million debt offering. Boart recently recorded a loss of $US329 million for the first half of 2013, driven largely by massive falls in earnings in its drilling services division as mining companies continue to slash their exploration budgets. Boart shares slumped as much as 8.2 per cent this morning after coming out of a trading halt this morning but have since trimmed losses to be down 2.1 per cent. Here's a good analysis by Michael West from Friday: Boart is living on the edge 11:48am: Growth in China's factory sector accelerated to a six-month high in September, a preliminary survey shows, as stronger domestic and foreign demand adds to recent signs of a tentative turnaround in the world's second-largest economy. The flash HSBC Purchasing Managers' Index (PMI) climbed to 51.2 last month from August's 50.1, hitting a high not seen since March. A breakdown of the data showed ten of 11 sub-indices rose in September. The flash PMI gives the earliest reading of China's monthly economic performance, and should cheer investors worried about a sharp economic slowdown after a previous rebound in activity proved short-lived. Notably, new export orders jumped to a ten-month peak of 50.8, up sharply from August's 47.2. It was the first time in six months that exports - an Achilles' heel in China's economy - had shown accelerating growth in the PMI. 11:38am: Home prices posted solid weekly gains in the past week, with prices increasing across all major capital cities, daily RP Data home price indices show. In seasonally adjusted terms, the strongest monthly home price gains to 22 September were in Sydney and Melbourne (+2.0% m/m), followed by Adelaide (+1.4% m/m). Auction demand and clearance rates remained extremely strong in both Sydney and Melbourne in the past week on elevated auction numbers. Sydney in particular posted the highest weekly clearance rate in the last five years at 88% while Melbourne's clearance rate also posted a strong 77%. Daily home prices Source: RP Data, ANZ 11:20am: It's the start of PMI and population week. Who would have thought purchasing managers would ever make it so big? Michael Pascoe comments. Business Week ahead It's the start of PMI and population week. PT4M39S http://www.smh.com.au/action/externalEmbeddedPlayer?id=d-2u8wr 620 349 September 23, 2013 - 11:20AM 11:13am: Treasury Wine shares have slumped dramatically as word spreads of chief executive David Dearie's departure. Shares have fallen 7.7 per cent, or 37 cents, to $4.39. ""You can do what you want with Penfolds, but unless they can get the story straight on the commercial wines there's just no way to make money,"" says UBS analyst Dan Hurren. ""Wine isn't just about brands, it's about managing costs through the entire range of products 11:06am: The euro is trading near a seven-month high against the US dollar, at $US1.3532, after Angela Merkel won an overwhelming endorsement from German voters, putting her on course for the biggest election tally since Helmut Kohl's post- reunification victory of 1990. Euro gains were capped as Merkel now needs to find a coalition partner after her preferred allies, the Free Democrats, crashed out of the lower house of parliament. ""This is a vote in favor of Merkel rather than a vote in favor of big changes,"" says Steven Englander, Citigroup's global head of G-10 currency strategy in New York. ""It's most likely Merkel will govern in a grand coalition with the Social Democrats, so that's a slight euro positive because the government would be somewhat more friendly to the peripheral nations in the currency bloc."" The Australian dollar fell as low as 69.00 euro cents, down from around 70 euro cents on Friday, and is currently fetching 69.35 euro cents. 10:55am: The Australian dollar has almost returned to the levels it was trading at against the US dollar before the Fed's decision to delaying the tapering of its stimulus program. So what should we expect from the currency markets in a week that is light on data - both in Australia and the United States? We've retreated from that initial steep rally after the Fed's [decision]. There's a bit of reassessment," said Westpac senior currency strategist Sean Callow. People are wondering whether the reaction was excessive and on Friday there was some US dollar buying after [St Louis Fed President James] Bullard's comments that the decision was a close one and that the October FOMC meeting is live. Callow says the Australian dollar's movements this week was likely to be dictated by offshore news such as the release of China's Flash HSBC PMI at 11.45am AEST today, which the markets expect to show continued improvement in the country's manufacturing sector. Callow says the US Congress' fight over the country's budget and debt ceiling could also be a key influencer on the Australian dollar's movements. The last time [Congress] had a debt ceiling showdown in August 2011, have a look at what happened to the Aussie. It just got smashed. So potentially a lot of risk aversion could stem from that. 10:45am: Macquarie Group has maintained its profit guidance for the coming financial year, saying it expects earnings to increase provided market conditions do not deteriorate sharply. In an update to investors, the home-grown investment bank said it expected results for the current first half to record results in line with the second half. The comments are in line with previous guidance in July. It comes after MacBank shares have risen strongly recently, last week hitting $50 for the first time since 2010. In early trade the stock was down 1.6 per cent at $49.20. 10:44am: Up in the Northern Territory, Andrea Sutton is today enjoying her first day as chief executive of uranium miner Energy Resources of Australia. Ms Sutton replaces Rob Atkinson at the helm of the Rio Tinto controlled company, which has operated the Ranger mine for close to 30 years. The start of her reign appears to have coincided with a small rally in the Uranium spot price, which has risen several times since it was fetching $US34.10 per pound on September 13. The spot price has lifted again overnight and is fetching $US35.25 per pound. That's still dreadfully low, but after two depressed years in the wake of the Fukushima disaster, the uranium sector will take any sign of improvement. The spot price is not critical to ERA; it sells its uranium on contract prices, which are typically above $US50 per pound. 9:56am: Treasury Wine Estates" chief executive David Dearie is leaving the company with immediate effect, after just two years in the job. Treasury chairman Paul Rayner said the board had decided to search for a new chief executive in the wake of a major writedown of aged and excess stock in the US. ""Following the writedown of excess US inventory announced on 15 July 2013, the board has undertaken a review and concluded that now is the right time to look for a new CEO,"" he said in a statement. ""In particular, having established a solid platform since demerger, the board believes Treasury needs a leader with a stronger operational focus to deliver the company's growth ambitions." In July, Treasury announced it would destroy more than $A35 million of aged and excess stock in the US and offer major discounts after admitting it overestimated the amount of wine needed to supply the market. The discounts and excess stock destruction were part of a broader $A160 million writedown. 9:53am: Investors are likely to focus on China later this morning, with the release of the HSBC flash manufacturing PMI data due at 11.45am. Estimates are for the small expansion seen last month to ramp up further; up 0.8 points in September to 50.9. The recent trend in Chinese economic data has been up, so it would be positive to see another stronger than expected result, which would indicate a possible turnaround in economic growth is occurring, says Rivkin analyst Tim Radford. "Another positive result from Chinese economic data will likely lend further support to Aussie miners, keeping declines stemming from negative offshore leads relatively modest today," he says. A strong result could reverse the opening calls for the ASX and the possible slide in the dollar - despite the RBA trying to talk it down. 9:38am: The Australian sharemarket is expected to have a ""softish start"" today as the US faces a disruptive budget and debt showdown, but the market may react positively to economic news from China, with PMIs released at 11.45am. Here's what you need2know: 9:37am: Good morning.