Markets Live: ASX droops on day one

The issues at Burrup were arguably the most concerning issue raised, given Orica and Norwegian partner Yara have spent $800 million on the plant over the past five years in the hope of supplying explosives to the iron ore miners in the Pilbara region.

Originally planned to be built by 2015, Burrup was declared commercially complete in September 2017, and was expected to operate at 30 to 40 per cent of capacity in 2018.

But Orica indicated the plant would not be operational until later in 2018 while Yara investigated the cracking.

"The joint venture operating partner, Yara, is addressing issues related to the construction quality of heat exchangers which have shown some premature cracking," said Orica in a statement.

"It is expected that the plant will be operational toward the end of this financial year."

The Burrup plant recently allowed Orica to snatch ammonium nitrate supply contracts with BHP and Roy Hill from rival ammonium nitrate producer Incitec Pivot.

Orica was not due to start supplying BHP until 2019, but Incitec's supply deal with Roy Hill was due to expire last month.

Orica said it did not expect supplies to customers to be affected by the cracking issue.

Shares in Orica are 4 per cent lower on Thursday at $17.91; the lowest since early December.

The private capital expenditure survey for the fourth quarter was a bit weaker than widely expected, but the key point remains that investment is no longer the Achilles heel of the economy as firms are starting to flex their spending muscles.

Despite the small disappointment, it is becoming clearer and clearer that investment will increasingly support GDP growth. That said, other parts of the economy aren't doing quite as well, so it looks as though the 0.6% q/q rise in GDP in the third quarter was followed by something similar in the fourth quarter.

Here's ANZ's Felicity Emmett:

Adjusting for the tendency for firms to understate investment at this point in the cycle, the numbers point to a rise in non-mining investment of 9% y/y in 2017-18 (slightly lower than the 12.6% rise expected three months ago) followed by a rise of 8% y/y in 2018-19. Bear in mind, though, that these initial estimates are particularly rubbery and are often subject to large revisions over the following 18 months. They do, however, act as a constructive guide for the medium-term sentiment around investment spending and on that front continue to suggest quite a positive outlook.

And AICD's resident economist Stephen Walters:

The likelihood of more delays in the planned lowering of the corporate tax rate in Australia does not seem to have played a significant role here, nor growing fears that interest rates probably have to rise. Indeed, firms can run ageing plant and equipment only for so long, so a wave of new investment on the replacement and upgrading of equipment should have been on its way. Moreover, public spending on infrastructure is enjoying a sustained upswing, particularly in the larger capital cities.

And from AMP Capital's Shane Oliver:

Forecast investment spending for 2017-18 has been lifted by 4.9 per cent from three months earlier to $115 billion, the bureau said.

Companies were also asked for the first time about their plans for capital expenditure in 2018-19. They anticipated spending $84 billion, which is 3.5 per cent more than the same initial forecast for 2017-18 published a year ago. It's the first time since 2012-13 there has been an increase on the prior year.

Economists surveyed by Bloomberg News predicted companies had forecast an initial estimates of $87 billion.

December quarter spending on buildings and structures fell 2.1 per cent from the previous three months, led by a 9.7 per cent decline in mining work. Manufacturing, by contrast, rose 12.3 per cent, and other non-mining industries rose 4.2 per cent.

Equipment investment rose 2.2 per cent in the quarter, with mining surging 21.9 per cent, while manufacturing and other industries were slightly down.

While the mining industry continues to lower its future investment plans, manufacturing and non-mining investment companies are raising expectations.

Manufacturers say they plan to spend $6.9 billion in 2018-19, which is 7.1 per cent higher than they first predicted for the current financial year 12 months ago.

So-called "other selected industries", which accounts for a significant, but not exhaustive, range of non-mining sectors, predict spending in 2018-19 of $51 billion, which is not only 8.1 per cent more than the forecast for this year 12 months ago, it is the biggest initial prediction on record.

The Productivity Commission's draft report into competition in the financial system singled out brokers for potential conflicts and high fee structures. And if the Royal Commission finds sufficient misconduct - or sub-optimal outcomes for customers - in the broker industry, it could lead the government to act, Credit Suisse says.

The analysts identify three potential areas of intervention:

1. Fees: increased transparency, an absolute reduction / removal of upfront commissions or shift to customers. For banks this could be beneficial whereby it could reduce cost of originating loans
2. Lender aligned/owned aggregators: Regulation could increase scrutiny and standards (such as "best interest" principles) on these aggregators. Alternatively, government could force disintermediation. CBA as the 100 per cent owner of Aussie Home Loans most negatively impacted.
3. Underwriting standards: ASIC has expressed concern that there may be systemic loan fraud in the broker industry. Regulation could be introduced which increases enforcement powers and penalties. For banks this would likely lead to improved credit outcomes.

"The rate of decline eased over the second half of February although values have fallen in most capital cities during February. The CoreLogic daily index indicates that the rate of decline eased late in the month, in line with improving auction clearance rates," Corelogic says.

"Sydney, Melbourne and Perth all recorded more moderate falls in values throughout February than they did in January."

Even across higher volumes, Sydney's auction clearance rates have started to improve in February, the first real month of activity for the year.

Last weekend, it posted a 71.7 per cent clearance rate across more than a thousand auctions, roughly the same as the week before at 74 per cent and higher than the first two weeks at 69 per cent and 63 per cent.

Melbourne was steadier, with its auctions clearing roughly in the low 70s throughout the month.

There was no need for immediate action however as levers in the market were still working towards a downward correction of the market, albeit a gentle one, head of research Tim Lawless said.

"The next couple of months should provide a much clearer picture as to whether the falls are set to continue, or if the market is in fact stabilising," he said.

"Considering the tighter credit environment, the eventual prospect of higher interest rates and ongoing housing affordability constraints, we expect housing market conditions will remain sedate relative to previous years.

Economists had been expecting the index to show a 0.2 per cent fall, with export prices rising 4.2 per cent and imports up 3.5 per cent, according to a Reuters poll. Export prices instead surged 4.9 per cent, led by prices for lamb, which jumped 12 per cent, and butter, which rose 11 percent. Import prices rose 4 percent, driven by a jump in global crude oil prices.

Weaker agricultural commodity prices of late will likely drive a 3-5 per cent fall in the terms of trade from its current all-time high, JP Morgan economist Ben Jarman said.

"This is obviously a dramatic deterioration, but it does moderate the most supportive factor currently underpinning long run valuation models for the exchange rate," Jarman said.

The New Zealand dollar was largely unchanged in the wake of the release, hovering just above a three week trough at $US0.72, after being knocked down in recent days by the rallying US dollar.

It's a turnaround for Shkreli, who was dubbed the most-hated-man in America after raising the price of a life-saving drug by 5,000 per cent. He blasted members of a congressional panel who had quizzed him about the price hike, calling them "imbeciles" on Twitter.

"I am now, however a more self confident and secure person," Shkreli wrote the judge.

"The demons that haunted me -- the root cause of my insecurity in my life -- no longer all exist. I have learned a very painful lesson."

US District Judge Kiyo Matsumoto in Brooklyn, New York, concluded February 26 that Shkreli caused investors to lose more than $US13.4 million, rejecting his claim he made them money.

His lawyers said that decision means Shkreli could face a sentence of more than 30 years in prison, arguing it's a term he doesn't deserve. Noting sentencing guidelines are only advisory, defense lawyer Ben Brafman asked that Shkreli get 12 to 18 months and community service.

Read more.

Oilers are having a tough time following falls in the price of crude. BHP is off 1.6 per cent, as is Woodside. Oil Search is off 3.1 per cent. Among the miners, Rio Tinto (trading ex-div) and Fortescue are down 0.8 per cent. Lithium miners Orocobre and Galaxy Resources are the early worst performers, off 8 per cent and 6 per cent, respectively.

The major banks are all off, with ANZ's 1 per cent drop the worst. Macquarie has managed to add 0.7 per cent, though.

"That suggests that in the next few years a recession will come and we will in a sense have already shot the monetary and fiscal policy cannons, and that suggests the next recession might be more protracted," he said during a panel with Bloomberg Television.

Later in an interview with Bloomberg, Summers said the economic situation the new Federal Reserve chairman Jerome Powell faces is "a difficult balance between the legitimate desire to stimulate the economy and to get as much employment and growth as possible, and certainly to assure that inflation gets back to 2 per cent".

"At the same time I think he has to worry about the financial foundation for recovery if you're the Fed chair, so I think there's a balance to be struck," Summers said.