The Australian sharemarket should be struggling to stay positive today as its new competitor Chi-X prepares to launch tomorrow.
It remains to be seen how the market reacts to the Qantas grounding, which is a terrible blow to the tourist industry.
Wall Street consolidated on its huge advance on Thursday but could only muster a rise of 23 points on the Dow on Friday.
Investors are now speculating how Europe will implement its bold plans and whether it will be enough to fill up the financial holes and save a Greek default that could shatter the European banking sector.
Back home the December SPI200 contract is currently up 13 points at 4362.
On Friday the ASX 200 edged up a mere five points to 4353 while the broader All Ordinaries added 7.5 points to 4411, but over the week gained 211 and 208 points respectively.
Tuesday will be the BIG day with the CHI-X trading launch, the Melbourne Cup and the Reserve Bank board meeting deciding what to do about interest rates.
Economic journalist Terry McCrann slipped this in at the end of an article mostly about Europe.
Note that a couple of days ago, he was saying a rate cut was odds-on.
So he has changed his position a little...
"Now the Cup Day Reserve Bank rate decision is finely balanced and the market surge might seem to weight the balance to leaving the rate unchanged.
If it was my decision, I'd leave it unchanged.
Not because Europe has "saved" us but on the basis that Europe and the US are unlikely to be seriously negative in the short term and China is still more likely than not to dump a tsunami of national income on us through 2013, the associated huge investment surge, and the likelihood that wages will break out.
The RBA has left the official rate unchanged at 4.75 per cent since last November.
Currencies have been erratic, especially the AUD which was down to $US1.03 and back to $US1.07 within 24 hours.
This was a good effort on Friday after unusually heavy selling was reported at non-institutional clients at several banks during the day. At week's end in New York, the Aussie was still holding on to $US1.0701.
The big miners should continue to find support today after a major rebound in the copper price this week although the metal was under a little selling pressure Friday.
*****
Shares of QANTAS (QAN) should be suspended this morning until we find out what happens next in the light of a statement from the company relating to the week-end evidence on the on-going case in front of Fair Work Australia.
On Friday its shares eased 2.5c to $1.54.
The Government and business community was shocked on Saturday when managing director Alan Joyce grounded the whole Qantas fleet after being unable to deal with the unions.
Qantas said that from 8pm tonight it will lock out all employees who will be covered by the industrial agreements currently being negotiated with the Australian Licenced Engineers Union (ALAEA), the Transport Workers Union (TWU) and the Australian and International Pilots Union (AIPA).
Mr Joyce declared the step was being taken under the provisions of the Fair Work Act in response to industrial action taken by these unions. The financial impact of action taken to date has reached $68 million and the action is costing Qantas approximately $15 million per week in lost revenue.
About 70,000 passengers have been affected and more than 600 flights cancelled.
Pilots, licenced engineers and baggage, ground and catering staff are essential to Qantas operations and the lock-out therefore made it necessary for all Qantas aircraft to be grounded.
The Government had been reluctantly to interfere because of the unions involved.
Qantas has now forced its hand.
The parties are now meeting at Fair Work Australia in a bid to resolve the impasse.
Mr Joyce has brought on a confrontation with the unions whose present claims could slowly ruin the company because it can no longer compete.
The unions are targeting job security but their actions will have the reverse impact.
*****
NATIONAL AUSTRALIA BANK's (NAB) chief executive Cameron Clyne looked to be patting himself on the back after the bank came in with a good earnings result and higher dividend.
The market impetus came from the announcement that NAB lifted net profit 23.6 per cent to $5.2 billion in year ended September. Final dividend rose from 84c to 88c, fully franked, and total dividend is $1.72, up from $1.52.
NAB shares shot up 92c to $25.87 on the news Thursday and added another 12c to $25.99 on Friday.
"This is a good result which demonstrates that NAB has continued to strengthen its core banking businesses," Mr Clyne said.
"It also represents strong progress against the strategic agenda NAB first outlined in early 2009."
"The 19.2 per cent increase in group cash earnings (to $5.5 billion) reflects the strength of both business and personal banking in Australia, which are key areas of strategic focus, combined with a lower charge for bad and doubtful debts.
"Careful management of costs, while growing revenue and continuing to invest in the business, was another important feature of the result," he declared.
*****
Volatile construction company, LEIGHTON HOLDINGS (LEI), was helped along by the late European solution with the shares finishing 84c ahead at $22.40 by week's end.
The company confirmed previous guidance for the current year of an after-tax profit of $600-$650 million.
The guidance did not include the estimated pre-tax capital gain of $225 million ($163 million after tax) from the sale of the HWE Iron Ore entities and assets in Western Australia.
The capital gain is subject to final reconciliation.
Chief executive officer Hamish Tyrwhitt said that the group had recently completed a detailed forecasting review across all of its operating companies.
*****
This is an excerpt from Ring the Bell ... from Bell Potter:
My view remains that shorters of FORTESCUE METALS GROUP (FMG) in particular are going to be killed.
The iron ore price is bottoming, Chinese equities are rallying, the company has successfully raised the $1.5 billion in expansion capex and after meeting with the company yesterday, and view photos of the substantial development progress, our view remains that the expansion to 155mtpa is on time and on budget.
I wrote previously that FMG's successful debt raising would be a "short cover the fact event", and while the company pressed to go button on the deal a fraction ahead of when I thought they would, the outcome is it brings certainty and the one thing shorters hate is certainty or fact. Short the rumour, spread the rumour, manipulate the CDS, short cover the fact.
FMG remains an ultra high conviction trading and investment buy recommendation.
You would have thought the shorters would have learned their lesson the hard way in banks, disc retailers etc, but no, they now are maximum short anything that producers iron ore.
Bad mistake, the iron ore spot price will bottom at the marginal cost of Chinese production ($120 -$130t). Similarly, the Shanghai Index has now had three up days in a row on the view Beijing is going to do more to promote GDP growth ahead of a change of Premier next year.
FMG shares slipped 3c to $5 on Friday.
*****
A stronger Aussie dollar seemed to fire up FLIGHT CENTRE (FLT) with the shares in two days surging ahead $1.42 to $19.97
It was also influenced by a first-quarter pre-tax profit disclosed at the company's annual general meeting in Brisbane on Thursday.
Managing director Graham Turner said global sales and profit results were currently above expectations.
"First-quarter trading results and October projections indicate that pre-tax profit is currently 25-30 per cent higher than during the previous corresponding period," Mr Turner said.
"So far, all regions are performing in line with or better than expectations, with Australia, the UK and our emerging Asia-Middle East businesses generating strongest growth."
FLT achieved a $245.2 million underlying pre-tax profit and a $213.1 million actual result during 2010/11 to easily surpass its previous full-year records.
This year, the company has released preliminary guidance pointing to an underlying result between $265 million and $275 million, excluding any major abnormal items that may arise.
