Commodities plunge. The prices of some of our major exports wobbled lower last night almost in unison as silly traders sent the ASX share futures (called the SPI) contract higher. After the shares of Fortescue Metals hit a six-year low yesterday and Rio Tinto shares hit a two-year low, you’d think that SPI traders would be more alert to what went on overnight — a 5%-plus fall in spot iron ore prices to US$52.28 a tonne — and that was after an 11% fall last week. US oil futures closed more than 7% lower, after a 7% fall last week, while Brent crude in Europe (and the global marker price) lost 4.9% on top of the 4.7% slide last week. And copper prices in New York fell 10% overnight to US$2.52 a pound in New York — that’s three cents away from the five-year low hit at the end of January this year. Gold edged higher in the only “good” news for commodity companies, but that was really only marking time as gold prices have failed to be ignited by the crisis in Greece and China’s big share rout. But don’t expect the slide in these vital commodity prices to prompt a rate cut from the RBA at its July board meeting today. — Glenn Dyer

Happy holidays. Greece’s banks will remain closed until tomorrow night, at least as the country and the rest of the eurozone attempt what could be a final round of talks tonight, our time. The European Central Bank continued its emergency help to the Greek banks, but increased the “haircut”, or the size of the discount those banks have to cop to be lent the money (e.g. instead of a discount of 10% or 20% it could now be 20% or 30%, or as much as 40% as suggested in some reports). The 89 billion euro maximum for emergency assistance remains in place and the Greek banks continue to be supported — but for how long remains the day-to-day question. Eurozone politicians are summiteering tonight and early tomorrow, our time, to discuss the Greeks and their predicament.

Greek banks are still rationing their shrinking pile of loot (500 million euros was one figure suggested in media reports) to customers at 60 euros a day. The lines in TV news reports this morning from late yesterday and last night were long and not getting any shorter. Some smarties have noticed that Greece houses a euro printing plant and have talked aloud about forcing the central bank to whip up a few billion notes to help meet the shortage, especially if the ECB turns off its emergency tap. If this were to happen, the ECB would have to retaliate, perhaps by repudiating all euros printed for the Greek central bank. They are easy to spot — they are all identified by a serial number commencing with a “Y.” Of course, chaos would follow such a move, but hey, it’s Greece. — Glenn Dyer

AGL joins the wasters list. With the advent of the June 30 full- and half-year reporting season for Australian companies, watch for news of huge write-downs, especially among resources groups. Many have already revealed cuts at the December half or earlier this year, and more are tipped to follow. Australian companies in this sector have a long and not very honourable reputation for over-paying and over-investing in new mines, wells, ports, etc, and then discovering they are not worth as much as prices fall, or they buy rivals or make silly investments that are later exposed after boom time passes. Rio Tinto, BHP, Woodside, Arrium, Santos, WorleyParsons are among the list of gold medal members of the write-down club, which is going to swell in the reporting season. In other words, they are gold-medal wasters. AGL made its bid for write-down glory yesterday by revealing more than $600 million in asset write-downs. These took the total for 2014-15 to $808 million pre-tax. AGL said the latest write-downs included cuts to the value of gas assets in Queensland, NSW (its controversial Gloucester project) and a small cut to the value of a gas project in central Australia. The cuts mean AGL will report a loss for the financial year, although it will emphasise its “underlying profit”, as they all do, when cleaning up their accounts after a boom. AGL won’t make the podium with this effort; it is sure to be overtaken by others in the next two months. One non-miner to keep an eye on will be retailer Woolworths — it badly needs a spring clean of its accounts to tidy up the value of its loss-making Masters hardware business and the sliding Big W general department store, which is losing heavily. — Glenn Dyer

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Peter Fray
Peter Fray
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