Wednesday, October 17, 2007

First Sino-European satellite completes mission



One of the two satellites of the Double Star mission was decommissioned on 14 October after its designed orbit lifetime came to an end.

TC-1 - along with its twin TC-2 - was the first satellite built and operated by the Chinese National Space Administration (CNSA) in cooperation with the European Space Agency (ESA). Over the past four years, the Double Star mission has studied the interaction between the Earth's magnetic field and solar winds.

After TC-1, which stands for Chinese 'Tan Che' meaning 'explorer', was launched into an equatorial orbit on 29 December 2003, it played a crucial role in various discoveries. For instance Double Star, together with the four satellites of ESA's Cluster mission, revealed that bubbles of superheated gas are constantly growing and popping where the magnetosphere is hit by the constant stream of gas from the sun.

Furthermore, TC-1 helped find that chorus emissions - waves naturally generated in space close to the magnetic equator - are created further away from Earth during high geomagnetic activity. Chorus emissions are involved in creating killer electrons that can damage solar panels and the electronic equipment of satellites, and are also a danger for astronauts. The information provided by the satellites was a step in the direction of being able to predict the waves' impact.

Data collected by TC-1 also shed light on the effects of space weather on the Earth's magnetic field, when TC-1 and the Cluster satellites were suddenly engulfed by oscillating waves of electrical and magnetic energy. TC-1 has 'brought in new perspectives concerning the boundaries of the magnetosphere and the fundamental processes that are playing a role in the transport of mass, momentum and energy into the magnetosphere', ESA states. 'Its data is essential to understand how the sun activity influences the near-Earth space and induces changes in the 'space weather' through magnetic storms and streams of high-energy particles.'

Initially, the mission was only intended to last one year. However, ESA and CNSA extended it twice until the end of September 2007. 'Double Star has demonstrated mutual benefit and fostered scientific cooperation in space research between China and Europe,' says Phillippe Escoubet from ESA. 'We expect even more results when the final archive of high resolution data will be made available to the worldwide scientific community.'

Galileo should be financed through EU budget, says Commission



The European Commission has recommended that the European Community take complete responsibility for funding the deployment of Galileo, Europe's satellite navigation system, warning of the consequences of shelving the project.

Galileo is a joint EU-European Space Agency (ESA) initiative, and was to be financed through a public-private partnership. It will see a network of 30 Galileo satellites beaming radio signals to receivers on the ground, enabling users to pinpoint exact locations.

Unfortunately the companies within the Galileo consortium were unable to agree on how to share the financial risks involved in the project and so this method of financing the deployment phase was abandoned. Since the early summer, the Commission has been looking into alternative funding scenarios, which it presents in the communication 'Progressing Galileo: re-profiling the European GNSS [Global Navigation Satellite System] programmes'.

The Commission, Parliament and Council have rejected the occasional call for the project to be written off on account of its inherent costs.

'Failing to take the appropriate decisions on a European GNSS programme, Europe would decide to rely for the mid to long term on foreign GNSS signals with little to no control over quality, availability or price of the latter. In addition, the ensuing loss of resident European expertise on GNSS would be coupled with a major loss of macro-economic opportunities for European manufacturing and service companies,' reads the Commission communication.

Jacques Barrot, European Commission Vice President, reinforced this view as he presented the communication. 'I am still convinced that Europe needs Galileo,' he said.

The Commission suggests that the €3.4 billion that is needed to get Galileo up and running could come from Community funds, ESA, or the EU Member States. The first option is favoured by the Commission.

ESA is already financing half of the development phase of Galileo. This model could in theory be extended to the deployment phase, but the Commission finds three problems with this scenario:
- not all of the EU Member States are members of ESA, and vice versa. This raises the issue of material and immaterial property rights in relation to Galileo;
- ESA financing would conflict with the Community character of the programme as the Budgetary Authority exercises no control over the part financed directly by ESA member countries;
- co-financing has an impact on the public governance of the programme.

The funding could also come in the form of direct contributions from the EU Member States. These contributions could not be received in the form of loans however, as the European Community is not allowed to borrow. 'The possibility of setting up such contributions needs to be studied in much detail as no easy transferable precedent exists,' says the Commission.

The document goes on to state that 'for legal, institutional and programmatic reasons, the Commission considers that only the European Union, as owner of the system, should provide the additional financial resources'.

If these additional resources are however to come from the Community budget, the multiannual financial framework must first be revised. A proposal on how this should be done therefore accompanies the Galileo communication.

The inter-institutional agreement on budgetary discipline is designed so that additional money can be sought when 'unforeseen circumstances' arise. The failure of the negotiations on the concession contract within the private consortium constitutes such unforeseen circumstances.

The two proposals, on the financing of Galileo and the renegotiation of the multi-annual financial framework, will now be passed to the European Parliament and ministers, who should reach a decision on funding before the end of 2007.

Thursday, October 11, 2007

World oil prices spike

WORLD oil prices surged overnight close to recent record heights after news that American crude oil stockpiles fell heavily last week, traders said.

The price of London's Brent North Sea crude for November delivery soared $US1.88 to $US80.48 per barrel.

New York's main futures contract, light sweet crude for delivery in November, jumped $US2.05 to $US83.35 per barrel.

Last month, the price of Brent oil hit a record high $US81.05 per barrel, while New York crude struck an all-time peak of $US84.10 largely owing to tight energy supplies.

The US Department of Energy (DoE) said overnight that American crude oil reserves slumped by 1.7 million barrels in the week ending October 5.

That confounded analysts' consensus forecasts for a gain of 1.0 million barrels.

US distillates, which include heating fuel, slid by 600,000 barrels, which was broadly in line with market expectations for a 775,000-barrel drop.

Petrol reserves gained 1.7 million barrels last week but remain at historically low levels, analysts said.

"Looking at the bigger picture they (the US figures) do raise a lot of concerns about what's happening with the overall market," said Alaron Trading analyst Phil Flynn.

He said: "Gasoline (petrol) inventories are near historic lows, heating oil supplies are well below normal and crude supplies are dwindling."

The weekly DoE inventory report was delayed by one day owing to Tuesday's Columbus Day holiday in the United States.

The drop in stocks of distillates - refined from crude - was a concern for the oil market ahead of the peak demand season for heating fuel.

"The market's on edge," said Jason Feer, Asia Pacific vice-president of energy market analysts Argus Media.

"The only thing that can bail you out is a warm winter," he said.

Earlier overnight, the International Energy Agency (IEA), the developed world's energy watchdog, held steady its forecasts for oil demand for this year and next.

The IEA predicted average oil demand to be 85.9 million barrels per day in 2007 and 88 million bpd in 2008.

World oil supply increased by 415,000 bpd in September from August owing to higher output in North America, China and from OPEC members, averaging 85.1 million bpd, the watchdog said in its monthly report.

The IEA said that its forecasts for demand would be affected by assessments of the health of the global economy by the International Monetary Fund and the Organisation for Economic Cooperation and Development.

Recent turmoil in global financial markets and weakness in the US housing market has raised uncertainty about the outlook for growth.

Over the past year, the Brent price has surged by 30 per cent and New York crude has rocketed 40 per cent.

Dollar hits new 23-year high

THE dollar hit another 23-year high in overnight trade, briefly reaching 90.61 US cents at 2.57am AEST.

The dollar peaked at 90.61 US cents during the New York session, clearly breaching the high of 90.50 US cents set on June 12, 1984.

The highest New York close since the dollar was floated on December 8, 1983, was 96.68 US cents on March 14, 1984.

The local currency traded above 90.5 US cents for lengthy periods during the overnight session. It has since lost some steam, but it remains above the US 90 cents level.

At 6.34am, the dollar was at 90.07 US cents.

European exchanges advance

EUROPEAN stock markets posted solid gains overnight, powered by a record-setting run on Wall Street and positive economic data from the United States.

In London the FTSE 100 index rose 1.38 per cent to close at 6724.50 while in Paris the CAC 40 added 0.42 per cent to finish at 5862.83. In Frankfurt the Dax gained 0.59 per cent to reach 8033.69.

The Euro Stoxx 50 index of leading eurozone shares added 0.70 per cent to close at 4473.57.

On the currency market, the euro soared close to its record high against the dollar on speculation the European Central Bank might raise its benchmark interest one more time between now and the end of the year.

The single European currency at one point rose to $US1.4240, just shy of its record $US1.4283 on October 1 and against $US1.4145 yesterday in New York.

The euro was later trading at $US1.4227.

On Wall Street the Dow Jones Industrial Average gained 0.74 per cent in mid-session deals to reach a record 14,185.26 points.

The tech-heavy Nasdaq added 0.77 per cent to 2833.21.

US stocks gained after Wal-Mart's chief financial officer, Tom Schoeve, said the giant retailer was raising its profit expectations for the third quarter.

Wal-Mart's finance chief said earnings per share were now likely to range between 66 and 69 cents compared with a prior forecast of $US62 to $US65.

"For the first two months of the quarter, we have seen improvement in initial margin and expense leverage at the Wal-Mart Stores division, which is driving this change," Mr Schoeve said.

The retailer's stock was trading up 3.0 per cent at $US46.99 amid the wider market gains.

In London, mining issues led the way on the back of fresh records in the prices of lead, gold and platinum.

BHP Billiton added 4.39 per cent to close at 1880 pence while Rio Tinto gained 3.52 per cent to reach 4563 pence.

Mortgage lender Northern Rock, after strong advances earlier in the week, was hit by profit-taking and lost 5.67 per cent to finish at 258 pence.

In Paris aerospace group EADS added 1.54 per cent to close at €23.15 on news that Spanish tour group Marsans had ordered 73 planes from aircraft manufacturer Airbus, a unit of EADS.

Bank Credit Agricole fell 0.82 per cent to €27.70 on comments from a young trader at its subsidiary Calyon who lost €250 million in New York.

He told the press that any suggestion that the trades had not been authorised was "absurd".

Food group Danone lost 1.16 per cent to close at €53.57 on news it would increase charges to its French distributors by an average of 10.48 per cent to take account of a sharp rise in basic dairy products in Europe and France.

In Frankfurt the day's big winner was Volkswagen, which rose 4.75 per cent to €183.57 after announcing an increase in sales in China and in its sales target on the Chinese market to 900,000 this year from 800,000.

Elsewhere there were gains of 0.27 per cent to 41,024 in Milan, 1.59 per cent to 15,100 in Madrid, 0.54 per cent to 4534.91 in Brussels, 0.39 per cent to 9218.28 on the Swiss Market Index and 0.62 per cent to 558.01 in Amsterdam.

Elsewhere overnight, Japanese share prices closed at a two-month high after Japan's central bank refrained from hiking interest rates and Sony Corp's newly listed financial arm made a solid debut, dealers said.

They said the market was also buoyed by a weaker yen and an upgrade to Japan's domestic debt rating by Moody's Investors Service.

The Tokyo Stock Exchange's benchmark Nikkei-225 index of leading shares gained 1.64 per cent to 17,458.98 points, the highest level since July 26.

Australian dollar touches US90c again

THE Australian dollar today closed higher and above US90c for the second time this week, after the domestic jobless rate fell to a fresh 33 year low.

The fall to 4.2 per cent in September - the lowest level since November 1974 - from 4.3 per cent in August, stoked speculation of another interest rate rise next month, pushing the unit higher.

At 5pm ( AEST), the Australian dollar was trading at US90.08c/US90.10c, up from yesterday's close of US89.87c/US89.92c.

During the day, it traded between a low of US8.966c and a high of US90.15c.

But Westpac chief currency strategist Robert Rennie said the initial market reaction to the jobless rate was limited because traders had anticipated that the data would reflect strong economic conditions.

"I think, for us to vault US90c and forge ahead at the pace we have become used to probably looks a bit less likely,'' he said.

"We would need to see a weakness in the US dollar and I think we have to see strong evidence that the Australian economy is accelerating.''

The domestic currency walked towards US90c late in the afternoon session, hours after the Australian Bureau of Statistics (ABS) released the September labour force report.

Mr Rennie said traders were forming the view that the Reserve Bank of Australia (RBA) would have to raise interest rates sooner rather than later.

"Certainly, today's data does add to the risk,'' he said.

"The strength of our domestic economy requires some further intervention from the RBA,'' he said.

The futures market has priced in a 70 per cent chance of an interest rate rise by the end of 2007.

The ABS also revealed that total employment in September rose by 13,000 to 10.528 million, seasonally adjusted.

Economists had expected total employment to rise by 20,000 jobs and a jobless rate of 4.3 per cent.

Full-time employment decreased by 17,200 to 7.522 million and part-time employment was up 30,100 to 3.005 million.

The participation rate in September was 65 per cent, compared with an unrevised 65.1 per cent in August.

Adding to speculation of a rate rise by the end of 2007 was the Melbourne Institute consumer inflationary expectations survey of 1200 consumers that found median inflationary expectations had jumped to 4.6 per cent in October, up from 3.1 per cent, to reach their highest level in two years.

The Australian dollar's overnight range is tipped to mirror today's pattern.

Wednesday, October 10, 2007

House prices defy relentless interest rate rises

AUSTRALIANS love their patch of land and as money pours into the real-estate market, house prices are expected to keep on rising despite the relentless rise of interest rates.
A survey by NEWS.com.au and polling firm Coredata has found most Australians, or 54 per cent per cent, believe property prices will rise over the next three months.

Just one in six of the 1530 people surveyed in September – or 16 per cent –thought house prices would fall over the next quarter.

The expectation of price rises comes despite Australians having been hit with multiple interest rate rises, with the most recent rise in August. The official cash rate stands at 6.5 per cent and standard variable home loan rates at 8.32 per cent, both at an 11-year high.

Survey: Have you been stung by bank fees?

Westpac today predicted another rate hike in December to 6.75 per cent given strong economic growth and growing inflationary pressures.

"A December rate hike seems the most likely prospect although a delay to February next year cannot be ruled out," says Westpac's chief economist Bill Evans.

House prices rise despite rates

Louis Christopher, the head of research at Advisor Edge, says house prices are rising due to several factors, including strong employment boosting incomes, good population growth and limited growth in the supply of housing.

"In some cities, the supply of new housing has stalled, especially in Sydney, but also in Brisbane and Melbourne, while demand is still growing due to strong income growth and population growth. That is pushing up house prices," says Mr Christopher.

"We've also seen credit firms loosening right up, so people who would not normally have gotten home loans have been getting them, pushing up demand for housing.

"But eventually, if interest rates keep on rising, there will be a breaking point, and house price growth will fall," says Mr Christopher.

Housing affordability to worsen

The steady yet relentless rise in interest rates in Australia over recent years is a prime candidate to explain why housing has become less affordable, according to a Macquarie Bank report on housing.

Macquarie too expects the Reserve Bank of Australia (RBA) to increase interest rates by a further 25 basis points, or possibly more.

"If growth remains strong and the RBA remains alert to potential inflationary pressures, interest rates could rise by another 75 basis points," say the report authors Brian Redican and Hayden Atkins.

"Should the RBA be compelled to tighten policy to address rising inflationary pressures, housing affordability would deteriorate significantly to the worst levels since in the early 1990s," Macquarie says.

On the less likely chance that rates were cut by 1.25 percentage points, due to slowing global growth, Macquarie predicts housing affordability would improve.

"If the RBA was forced to cut interest rates significantly … housing affordability would improve dramatically," the report said.

"Interest payments would decline to around 30 per cent of income which has been sufficient to kick-start activity in the past."

But for now, with house prices looking set to grow and interest rates remaining steady or going up, housing affordability could worsen.

"The most likely scenario – one of modest house price growth – would be sufficient to maintain affordability at current levels. But should house price growth beginning to accelerate back
towards its long-run average level, there will be a marked deterioration in affordability," says Macquarie.

Tuesday, October 9, 2007

Pacific Highway fully dual by 2016

THE Pacific Highway will be dual carriageway from start to finish by 2016 under a plan to be unveiled today by the Federal Government.

The highway, which stretches north from Sydney to Brisbane, has long been considered one of the country's most hazardous roads, with 25 people killed on it in 2006.

The commonwealth wants state governments to match its pledge of $2.4 billion to eliminate narrow and dangerous stretches of the highway, News Ltd and Fairfax newspapers report.

Regardless of state funding, the Federal Government will start work on stretches of the highway between Sydney and Woolgoolga, south of Coffs Harbour, and south from Brisbane to Ballina.

Prime Minister John Howard is expected to make the funding announcement at Grafton today.

The funding is expected to come during the 2009-2010 and 2013-2014 financial years.

The Government announced $22 billion for a national road building program in May's budget and at the time the Australian Automobile Association called for $25 billion to improve safety at major blackspots including the Pacific Highway.