Stocks hit by trading glitch

Australian shares halted as the ASX deals with a trading glitch. - leaving investors unable to react to earnings news and developments in Europe.

Chris Zappone explains just what implications the trading halt will have on global markets.

Australian shares halted as the ASX deals with a trading glitch. - leaving investors unable to react to earnings news and developments in Europe.

12.25pm:Here's a view from the industry - Derek Growns, the head of private wealth management at Wilson HTM, noting that today is the October options expiry day, so that that any exchange-traded options linked to equities are due to be rolled over or liquidated.

“It’s generally a busy day,” he said. “Here we are after midday and the exchange is putting out an announcement every 10 minutes.”

Mr Growns said it's rare to have an outage run so long:
“It’s frustrating there is no business going on and the problem at this stage is that we don’t know when it’s going to go on."

“It must be an embarrassment to the ASX given that (rival exchange) Chi-X is due to begin next month.”

12.19pm: As the item at 12.11 notes, there's a lot still to be resolved in the Europe talks. Can't help thinking that this quote from Poland's Prime Minister Donald Tusk hits it:

‘‘Everyone is impatiently awaiting the details but it’s not the devil that’s in the details, it’s all of hell,’’ he said. ‘‘Will we know the details tonight? I’m prudent, not to say sceptical.’’

12.13pm: Seems like today's a particularly unhelpful day for the system to seize up - although a major breakdown in European debt talks would make it worse. Here's one comment to this blog of note:
'Options expiry day today - what will happen there? Bad luck if you need to exit a position!'

12.11pm

    EU leaders are still still struggling to find a solution to the euro zone debt crisis, but it is proving elusive, with the banks unwilling to accept a big write-down on their Greek debt.

12.07pm: Two hours in, and no solution. Bad look for the world's 8th largest sharemarket...according to the ASX website. Then again, it does carry a 'currently trading' tag - and that's clearly not accurate.

11.57am: As Reuters notes:

    The technical glitch is an embarrassment for the ASX, coming just days ahead of the launch of trading in Australia by rival bourse operator Chi-X.
    Chi-X, which counts Nomura as its top shareholder, is set for a soft launch in Australia on Monday, breaking the two-decade monopoly held by the ASX.
    Chi-X, which is looking at new market opportunities in Asia Pacific and Latin America, has sold stakes to five top trading firms including Goldman Sachs and Morgan Stanley and plans to lean on these new partners to find the markets, its Chief Executive Tal Cohen told Reuters.

11.52am: Explosives and fertiliser supplier Incitec Pivot is looking into building an ammonium nitrate manufacturing plant on the site of its fertiliser facility in Newcastle in NSW. The company will conduct a feasibility study into construction of the plant, which would produce ammonium nitrate for the mining industry in NSW, particularly in the Hunter Valley. The study is expected to be concluded in the fourth quarter of calendar 2012.

11.45am: Gold miner Newcrest says volatility in global markets and financial concerns in Europe and the United States will likely support a strong gold price in the short and medium term. Newcrest is in a healthy financial position with strong profit margins and low debt, chairman Don Mercer has told the company’s annual general meeting.

11.41am: Still no movement on the ASX. It's now been out of business for over an hour-and-a-half.

11.31am: GPT Group says it is on track to increase full year operating earnings by seven per cent on what the property investor says is the high quality of its portfolio. GPT says the increase in operating earnings was well above the target of the CPI plus one per cent. Total shareholder return for GPT for the rolling 12 months to 30 September 2011 was 12.7 per cent. GPT said occupancy at its retail properties was at 99.9 per cent, office occupancy was at 97.5 per cent and industrial occupancy was at 100 per cent, as of September 30.

11.25am: Yesterday's main story was the release of CPI figures showing underlying inflation growing at its the slowest quarterly pace in nearly a decade. Today Treasurer Wayne Swan says there would be no excuse for retail banks not to lower their loan rates should the Reserve Bank cut the cash rate next week. The edict comes as the National Australia Bank this morning reported a near 24 per cent jump in annual profits to a record $5.22 billion.

11.20am: Tokyo stocks have opened 0.35 per cent up as investors waited for the outcome of the marathon EU summit on the debt crisis. The benchmark Nikkei index at the Tokyo Stock Exchange opened 30.93 points higher at 8,779.40.

11.15am: The currency market is trading despite the ASX glitch. The Australian Dollar is currently buying US$1.0418, 74 Euro cents, 65 British pence, and 79.398 Yen. 

11.13am: Chi-X, the rival trading market, is due to start soon too. Presumably they won't mind if the halt lasts all day.

11.11am: ASX spokesman Matthew Gibbs said that the market was halted at 10.05am after market participants were unable to conduct transactions.

    At that time 6700 trades had already taken place, he said, but the nature of the problem was still unknown.
    "At this stage we just don't know what the problem is," he said.

11.08am: Bit more on that Woolies result, and why investors probably won't respond positively when they get a chance to trade:

    Woolworths, posted a 1.9 percent rise in first-quarter comparable store sales in Australian food and liquor, missing expectations, and said the retail sector continued to be hurt by lack of consumer confidence.
    A Reuters survey of six analysts had expected 2.7 per cent growth.
    Woolworths, which also owns discounter Big W and electronics chain Dick Smith, said total sales in the three months to Oct 2 rose 4.9 per cent to $14.6 billion from $13.9 billion a year ago.
    Woolworths has said net profit growth would be limited to between 2 per cent and 6 per cent in fiscal 2012.

11.03am: An hour into the frozen trade.Meanwhile, from the AGMs:

    James Packer, chairman of casino owner Crown, says proposed poker machine reforms will not tackle problem gambling.
    Speaking at Crown’s annual general meeting in Melbourne on Thursday, Mr Packer said mandatory pre-commitments for high-intensity poker machines was not the right solution.
    ‘‘We don’t have an issue with the Federal Government taking action against problem gambling, but it must be the right solution,’’ he said.

10.53am: Another trader describes the finer details of what's going on:

Currently the market has gone into what is officially termed an ''enquire'' mode, which means there is no trade at all.

Once the tech problems have been resolved the market will then go into a ''pre noticed received'' phase, or what brokers call a ''pre-auction'' phase for about 10 minutes.

That gives traders (etc) the chance to sort out orders after which trading will start.

10.47am: One trader telling BusinessDay that it may be hours before trading resumes.

10.45am: The ASX sent out an alert shortly after the market opened at 1000 AEDT adding that all trades for today are under review.

The benchmark S&P/ASX200 index was halted after falling 0.3 points to 4,242.2, while the broader All Ordinaries index was down 0.1 points at 4300.7

.By 1035 AEDT on the ASX 24, the December share price index futures contract was down five points at 4,217, with 9,369 contracts traded - presumably that's also halted (although AAP not say.)

10.41am: Australian stock exchange operator ASX Group has halted markets due to technical issues and is seeking to resolve the problem, a spokesman said, according to Reuters.

    The spokesman did not elaborate on the technical issues nor give an exact time frame for resumption of trade.

10.32am: Oddly enough, the data glitch is broad - even on the ASX's own website, there's a flatline. So far, though, ASX not saying what's up, and the various news agencies aren't much help:

The Australian Securities Exchange says it is experiencing technical difficulties and has placed all markets into enquire until further notice. The exchange also said in an alert that it was reviewing all trades for trades.

10.22am: Notice the flatline above? ASX has a data problem...which we'll get more detail about soon. Hence, no share price reaction to NAB, Woolies, Ten so far.

10.12am: Stocks mixed but this news just in might not help:

    Woolworths increased first quarter sales by 4.9 per cent as Australia’s biggest supermarket chain increased market share and customer numbers.
    Sales increased to $14.597 billion for the 14 weeks to October 2, compared with $13.91 billion a year earlier, Sydney-based Woolworths said.
    But the company’s general merchandise division, which includes discretionary retailers, reported a 1.6 per cent sales decline to $1.522 billion.

10.05am: Europe, of course, remains a large part of the markets story today. Latest view is that there's an accord to raise the size of the rescue package but the size of the 'haircut' banks will take over Greece government debt remains unresolved.

10.02am: Australian pay-TV group Foxtel's $2 billion takeover bid for rival Austar United Communications should be finalised in early 2012 subject to a number of conditions being met, Austar said in a statement.

    It said the Australian competition regulator planned to release a decision on the deal by Nov. 30, 2011.

    Foxtel, which is 25 per cent owned by Rupert Murdoch's News Corp, has bid $2 billion for Austar but there has been concerns the competition watchdog may block the deal.

9.45am: Good morning. Lots going on at home and abroad - which we'll try to keep up with through the trading day.

So far, on the home front, we've had a record NAB profit result that looks to be have topped analysts' expectations, so that stock may get a rise at the open.

Ten Network, meanwhile, has posted a 91 per cent drop in full-year profit.

In case you missed our morning need2wrap, here are a couple of the highlights:

need2know
SPI futures up 0.6 per cent
Dollar hovers at $US1.04
Wall Street advances; Dow up 1.4%
Gold rises to one-month high
Oil retreats as demand hopes fade

This blog is not intended as investment advice.
 

Source: http://www.smh.com.au/business/markets/stocks-hit-by-trading-glitch-20111027-1mkuj.html#ixzz1bwRgFzN3