Strong retail sales could keep interest rates higher for longer, ASX hits record, gold sector soars on $5b takeover — as it happened

That's all for our live markets blog today, thanks to the trusty Steve Letts for his comprehensive coverage as usual.

Catch The Business tonight or catch up on the rest of the day's business news online.

See you bright and early tomorrow for a round up of overseas markets.

A record is a record after all, but it couldn't be said that today's record close was a barnstorming event.

After wobbling around, the index closed up 0.1% at 8,447.9 points, beating the previous record set last Thursday by 3.6 points.

Non-discretionary retail and energy were the strongest sectors, while health care and industrials dragged things down.

The non-discretionary retailers were led by Metcash (+2.2%) which announced better-than-expected half-year profits this morning.

Coles (+0.7%) and Woolworths (+0.5%) also gained.

The energy sector saw gains from gas producers such as Woodside (+1.2%) and uranium miners like Deep Yellow (+2.5%).

Overall, the miners did well.

Drilling down into the gold miners, De Grey Mining took off on the takeover bid from Northern Star Resources, which also gave a leg up to Gold Road Resources (a shareholder in De Grey) and Bellevue Gold, but they were the exceptions today, everything was sold off thanks to a falling gold price.

The market appears to think Northern Star may have paid over the odds; it fell 5.3% after the announcement.

Unsurprisingly De Grey was today's big winner.

While Northern Sar was the biggest loser.

Asian markets mostly made gains over the day, while the Australian dollar has slipped below 65 US cents.

Looking ahead, Wall Street's S&P 500 is priced to drop 0.2%.

Don't think we're running out of things to talk about just because it is December ... we have another busy program for you today.

• Nassim Khadem takes stock of the national housing market, which  property analysts say is teetering on the edge of a downturn
• Assistant Treasurer and Financial Services Minister Stephen Jones joins me to discuss the government's further crackdown on the dominance of big tech 
• ANZ chief economist Richard Yetsenga tells us where he sees the AUD in the next three to six months
• And we look at the latest retail sales data the RBA is sure to be interested in (spoiler: it's come in stronger than expected and pertains to the period before the Black Friday and Cyber Monday sales).

Tune in to ABC News at 8.44pm, after the late news on ABC TV, or on ABC iView (you can watch the last six weeks or so worth of episodes here too!).

Hope to catch you then.

Investors appear to have liked Metcash's half year results, but that was largely because their expectations were beaten down by a downgraded earnings guidance in October.

At 3:30pm AEDT, Metcash's shares had risen 2.6% to $3.20.

The underlying profit of $134.6 million was right at the top of the downgraded range and ahead of consensus expectations.

J.P. Morgan's veteran retail analyst Bryan Raymond pointed to a slowdown in food sales and tighter margins in liquor sales on the negative side of things.

He said the key positives included higher margins in Metcash's supermarket and convenience store business.

He said an increased sales momentum in the Total Tools business and the increased market share IGA was winning in liquor lifted the result.

It could be noted that mixing power tools and alcohol often can lead to disastrous results, but Metcash seems to have avoided any issues this time around.

Northern Star Resource's sinking share price since it announced it had slapped $5 billion down on the table to buy its smaller rival De Grey Mining would seem to indicate investors believe it has overpaid for what is essentially a development project, rather than an operating mine.

However, in the analyst community, the reaction is more that Northern Star has paid a full price but had not overdone it.

The proposal is a full scrip transaction, with De Grey shareholders receiving 0.119 new Northern Star shares for each share they hold.

RBC analyst Alex Barkly says the deal offers a premium of 37.1% over De Grey's last closing price and a 43.9% premium on the 30-day value weighted average price (VWAP), valuing De Grey at approximately $5.0 billion.

RBC's own valuation of De Grey is $4.3 billion, suggesting Northern Star paid around a 16% premium.

De Grey's key asset is the Hemi project in the Pilbara which isn't due to start producing until late 2027.

It is expected to have a mine life of around 12 years and at its peak, produce around 700,000 ounces of gold per annum.

While the mine still requires WA state and federal environmental permits, the site already has a mining license.

Mr Barkley says from a De Grey perspective, the 37% premium is adequate for a project which still carries risks relating to its development and rising costs.

He says while Northern Star assumes the technical risks, the timing of the offer could give it a more value-accretive entry point than buying the mine when it was producing.

"In our view, Northen Star has a good operating track record, strong technical expertise, a strong balance sheet and is cash flow generative. This should help allay fears of those risks." Mr Barkley wrote in a note to clients.

J.P. Morgan's Al Harvey describes the deal as a "win-win" for both companies, although Northern Star is paying a "full" price for the Hemi project.

Mr Harvey says Northern Star's foray into a greenfields development is unusual.

"The acquisition is quite different to Northern Star's historic strategy of acquiring older assets in production and recapitalising," Mr Harvey said.

He said that given key De Grey staff would be sticking with the project and Northen Star's experience in refining gold, there were few concerns about the deal.

The other winner is Gold Road Resources, which holds a 17% stake in De Grey.

RBC's Alex Barkley says Gold Road has publicly stated they have considered a strategic sale and have suggested they were holding out for a potential premium.

"While Gold Road may prefer a deal with a greater cash component, Northern Star's ASX listing still would offer Gold Road and its shareholders a liquid realisation of value," Mr Barkley said.

At 3pm, AEDT De Grey was up 29.4%, Gold Road was up (.0% and Northern Star was down 6.1%.

Hi Alex, you'll be pleased to know our colleagues in Victoria have been covering the latest updates on the Woolies distribution centre industrial action today.

Having picked up a bit of momentum mid-morning, the ASX 200 appears to be running out of puff.

At 2:10pm AEDT the index was up just 0.1% at 8,464 points.

With gross domestic product (GDP) figures out on Wednesday, the so-called "partials" are coming in thick and fast. These are some of the key components that make up the economic growth (or contraction) recorded in the National Accounts.

Because one key way of measuring economic output is through incomes, the company profits and wages data released today by the ABS are quite significant.

Analysis from CBA economist Stephen Wu shows that companies are not doing so well on the profit front (dropping 3.9 per cent in the quarter).

"Cumulatively, company profits have fallen by almost 17% from their peaks in early 2023," he notes.

"This has been led by the mining sector, given the fall in commodity prices over the past couple of years. But non-mining profits still fell by 1.7%/qtr to be 2.8% lower over the past year.

"Mining profits fell by 8.8%/qtr, a third consecutive quarterly decline. Lower commodity prices were the key driver. The implicit price deflator for the mining sector fell by 5.5%/qtr and by 8.3%/yr. Mining profits have collapsed by 40% since their peak in Q2 22. The tailwind to national income and governments' budgets from commodity prices is fading.

"In the non-mining sectors, the largest quarterly falls were recorded in 'Other services' ( 8.0%, e.g. personal & other services, repair and maintenance), accommodation & food services ( 5.1%) and wholesale trade ( 4.8%). Utility providers' profits have recorded the largest increases, with 'Electricity, gas, water & waste services' up by 1.7%/qtr and 14.0%/yr, on strong price rises."

But, while businesses' wages bill rose by 1.2% in the quarter, things weren't quite as good as that initially sounds for the nation's workers either.

"The annual rate saw a further fall to 4.0% from 5.4% previously and well down from the peak of 11.4%. Around 11% of the total wages bill is directly affected by the Fair Work Commission's (FWC) minimum and award wage decision. For 2024 25, the FWC awarded a 3.75% increase, much lower than the previous year's outcome of 5.75%," Wu observes.

"The 4.0% rise in the wage bill over the past year appears low when compared with the 3.5% increase in the Wage Price Index (a pure measure of wages growth), the 1.5% increase in total hours worked and the 2.9% increase in employment.

"The annual rise in the wage bill is weak. It is running below the pre-pandemic pace, where it was hovering at just under 5%. During that period, annual wages growth was around 2%, and the unemployment rate was between 5-5¼%."

The net result? No-one's having a particularly great time at the moment, capitalists or workers.

The pulse of China's industrial heartland has strengthened with the latest manufacturing data pointing to an expansion in activity.

The Caixin Purchasing Managers' Index rose to 51.5 in November, up from 50.3 the month before, with 50 being the neutral figure between expansion and contraction.

The amount of new work, including orders from overseas, increased boosting production levels, while purchasing activity and inventory levels also rose as confidence about the year ahead grew, according to Caixin.

Caixin conducts the unofficial Chinese PMI, concentrating its survey on small-to-medium sized businesses, as opposed to the "official" National Bureau of Statistics PMI which has a greater weighting towards large state-owned enterprises.

The NBS manufacturing PMI released over the weekend also showed an expansion in activity, but a bit milder.

The Caixin survey noted incoming new orders placed with Chinese manufacturers increased amongst the fastest rate in three-and-a-half years with a renewed rise in export orders also supporting the rise in overall new orders.

The purchasing managers interviewed better underlying demand conditions, new product launches and stockpiling following the US election were amongst the reasons for the rise in new work.

Caixin Insight Group senior economist Dr Wang Zhe said while business optimism has improved and demand has picked up, "the downward pressure facing the economy remains prominent."

"While the economic downturn appears to be bottoming out, it needs further consolidation," he said.

Some analysis on last month's 4.2% rise in residential building approvals from Housing Industry Association economist, and self-confessed ABC business blog junkie, Maurice Tapang.

"It has been more than a year since the RBA last raised interest rates. Unchanged interest rate settings has provided some degree of certainty for consumers," he writes.

"Households are returning to new home building despite there being no cut to the cash rate. This is because unemployment remains at very low levels, while housing demand remains very strong.

"Prices of home building materials have also been growing at a more normal pace, the latest data showing a 1.4 per cent annual increase in September 2024.

"Low unemployment, unchanged interest rates, stable growth in materials prices and a return to normal build times are helping lift up the market from its recent trough."

The ASX has picked up a bit of momentum after a sluggish start to the day's trading.

At 1pm AEDT the ASX had gained 0.3% to 8,460 points, on track to beat the record close set last Thursday.

Technology and non-discretionary retail are the strongest sectors, while healthcare and industrials are dragging things down.

The non-discretionary retailers are being led by Metcash (+3.0%) which announced better-than-expected half year profits this morning.

Coles (+0.9%) and Woolworths (+0.5%) have also gained.

Overall, the miners are doing well.

Drilling down into the gold miners, De Grey Mining has taken off on the takeover bid from Northern Star Resources, giving a leg up to Gold Road Resources (a shareholder in De Grey) and Bellevue Gold, but they are the exceptions today, everything has is being sold off.

No surprises that the big winner of the morning is De Grey Mining which is up 27.5% after accepting a $5 billion takeover offer from Northern Star Resources.

The market appears to think Northern Star may have paid over the odds; it's down 6.5% since the announcement.

• ASX 200: +0.3% to 8,460 points (live values below)
• Australian dollar: -0.1% to 65.01 US cents
• Nikkei: -0.4% to 38,071 points
• Hang Seng: +0.1% to 19,442 points
• Shanghai: -0.2% to 3,910 points 
• S&P 500 (Friday): +0.6% to 6,032 points
• Nasdaq (Friday): +0.9% to 20,930 points
• FTSE (Friday): +0.1% to 8,287 points
• EuroStoxx (Friday): +0.7% to 499 points
• Spot gold: -0.7% to $US2,636/ounce
• Brent crude: +0.1% to $US71.89/barrel
• Iron ore (Friday): +1.0% to $US104.00/tonne
• Bitcoin: +0.4% to $US97,795

Prices current around 12:45pm AEDT

Live updates on the major ASX indices:

The number of job ads fell 1.3% in November, but it is still almost 2% higher than its low this year in August.

The survey conducted by the ANZ and the jobs portal Indeed shows the number of job ads has fallen 27.6% from its peak in June 2022 but is still 15.1% above pre-pandemic levels.

Queensland was the only state bucking the trend with job ads rising to their highest level since early 2023.

"Christmas-related hiring continues to influence national trends, with a sharp fall in retail opportunities in November only partially offset by growing opportunities in food services ahead of the holidays," Indeed senior economist Callam Pickering said.

"Overall, Christmas-related hiring has provided more uplift to Job ads this year than last year.

"Job ads also rose considerably in education and personal care during November, which was more than offset by relatively small but broad-based declines elsewhere," Mr Pickering noted.

An interesting point from Alex Joiner, the chief economist at IFM Investors regarding the retail sales data's impact on RBA thinking

Dr Joiner says with retail sales solid for a few months now, whatever the reason, it suggests that the average consumer is doing ok, the RBA doesn't need to provide rate relief.

"Retail sales in annual now running ahead of population growth. If this continues underpinned by a relatively tight labour market the RBA will remain concerned about the inflationary outlook and won't see the opportunity for a rate cut any time soon," Dr Joiner said.

Hello, it's Sam from the team. Stephen has kindly allowed me to make this post. There is some news coverage this morning about Tupperware to officially shut down in Australia. I'm trying to verify this with Tupperware Australia and its new parent company Party Products (in the US), but I need your help. Are you a Tupperware worker? Have you received an official email or notice about this? Do you have any information you could share? Please leave a comment with your contact details or email me via yang.samuel@abc.net.au or yang.samuel@protonmail.com. Many thanks!

Company profits fell 4.6% in the September quarter to be down 8.5% year-on-year.

The fall was largely driven by an 8.8% fall (seasonally adjusted) in mining sector profits.

The ABS quarterly Business Indicators data also show wages rose 1.2% in the September quarter, to be 4% higher year-on-year.

The indicators, which are a key piece of Wednesday's GDP figures show inventories fell 0.9% over the quarter.

IFM Investors chief economist Alex Joiner says the weaker than expected inventories figure is expected to slice around 0.5 percentage points off GDP.

Building approvals posted another monthly increase in October largely thanks to a spurt of activity in the apartment sector.

The total number of dwellings approved rose 4.2% in October to 15,498, following a 5.8 per cent increase in September, according to seasonally adjusted data released today by the Australian Bureau of Statistics

"The overall rise this month was driven by an increase in apartment developments approved in New South Wales and Victoria, with private dwellings excluding houses rising 24.8 per cent," ABS head of construction statistics, Daniel Rossi, said.

"Meanwhile, private sector house approvals fell by 5.2 per cent in October, after reaching a two-year high in September."

In heartening news for the retail sector, sales rose a better-than-expected 0.6% in October.

It's the third successive month of increases following the 0.1% increase in September and 0.7% in August.

"After a steady result last month, retailers told us that sales activity grew in October ahead of the Black Friday sales," ABS head of business statistics Robert Ewing said.

"The stronger than usual October month saw some retailers enticing buyers to spend early with discounting, particularly on discretionary items."

The big broking house J.P. Morgan has completed a deep dive into the iron ore market and concluded the fundamentals are improving.

In short, the bank's mining analysis team led by Lyndon Fagen forecast iron ore prices would hold at $US100/tonne over 2025 before easing to $US95/tonne in 2026.

Mr Fagen said the key takeaway from the review was that Chinese steel demand has rebounded and is now down just 1% year-on-year in October, despite a surge in exports.

"Output has recovered rapidly through October and into November (to above 2022/23 levels at this time of year) as steel margins improve, and steel inventory remains below seasonal average levels," Mr Fagen wrote in a note to clients.

The key points in the broker's report are:

• Steel prices and margins have improved in China
• Chinese steel output has recovered rapidly through Oct / Nov to above 2022/23 seasonal levels
• China's steel inventory is below seasonal average levels at traders but has normalised at the mills
• Chinese iron ore mines typically reduce utilisation rates over winter months driving strong positive seasonal factors over Dec-Jan
• Iron ore prices remain around cost support ($US100/t) making it uneconomic for material swing supply to enter the market
• Iron ore inventory at Chinese ports has stabilised