Crikey

The market is up 23 outperforming the 27 point fall predicted by the SFE Futures this morning. Financials down 0.8%. CBA down 2% after announcing a $750 raising. WBC down 7.8% close to the $16 discounted $2.5bn placement price from its capital raising yesterday. Resources outperforming  — up 1.9%. BHP and RIO up 2.5% and 2.6%. Fortescue up 9.8%. Glenn Stevens said forecasts for China’s growth were still too high and that the global recession will continue to take its toll on China. Industrials up 0.6%.

The Dow was down 242 . Down all session  — down 283 at worst. Stocks down after a 2-day 7% rally. 2 stocks down for every 1 up. All 10 sectors down. FedEx, Texas Instruments and Nucor issued profit warnings. October pending home sales down 0.7% month-over-month  — less than the 0.3% fall economists expected. BHP down 0.37% in ADR form overnight, RIO up 0.9%. Metals mixed. Oil price down $1.69 to $42 on reports that a further weakening global economy will result in an even sharper fall in energy consumption in 2009. Gold up $4.90 to $774.20. Bonds up with the 10 year yield down to 2.63%. A$ down 0.84% against the US dollar. Financials down 4.9%  —  JP Morgan down 7%. Merrills down 5%. It’s likely the Senate will hold a vote Wednesday on the $15bn bailout of the auto industry.

Capital Raising of the Day  —  As expected the CBA have swiftly followed yesterday’s $2.5bn capital raising from Westpac with its own $750m placement. They are using the money to redeem their PERLS II securities (PCB) that expire in March.

In the news today…

• Wesfarmers (WES) says despite the incident over the weekend that damaged a dragline, production at its Curragh coal mine is expected to be in line with forecasts.
• Santos (STO) says it is in discussions with its financial partner in Indonesia regarding it reaching a financial settlement over liability relating to a mud flow incident in 2006.
• Paladin Energy (PDN) has offered to buy Fusion Resources (FSN) for $17.8m to expand its portfolio in the Mt Isa region of QLD.
• BHP Billiton (BHP) performing well after Macquarie Equities said its iron ore shipping rates are holding up well despite deteriorating market conditions.
• Mincor Resources (MCR) struggling after saying it will shut the Miitel mine from Christmas due to the falling nickel price. Insists it will meet production target of 16,000 tons-19,000 tons for FY09.
• Futuris (FCL) has completed the divestment of 100m Amcom shares. Proceeds of $9.5m will be used to pay down debt.
• PaperlinX (PPX) has completed the construction of its Maryvale Mill upgrade.
• Incitec Pivot (IPL) has completed the retail component of its rights offer and raised around $83m.
• OneSteel (OST) said it doesn’t expect its net profit before one-off items in the 1H to differ by more than 15% from a year earlier.
• Both Westpac and Bank of QLD hold their AGM’s tomorrow.

Broker Stuff today…

• Credit Suisse has cut Tabcorp Holdings (TAH) to 1000c from 1100c after the QLD government raised taxes on slot machines. They maintain their Outperform recommendation and suggest the company improves their balance sheet. Citi cut their target price to 668c from 751c and maintain their HOLD recommendation.
• Merrill Lynch cut their recommendation on Westpac Bank (WBC) to 2330c from 2590c after its institutional placement but maintain their Buy recommendation saying WBC is now well capitalized compared to its peers.
• ABN AMRO upped their recommendation on Pacific Brands (PBG) to Hold from Sell despite cutting their target price to 50c from 80c after announcing it would cut its dividend yesterday.

In other news…

• Fairfax Media (FXJ) is in focus as the board meets today  — acting CEO Brian McCarthy is expected to be confirmed CEO and we should also get some news regarding its dividend.
• Australian Housing Finance for October came in below expectations  — finance was 1.3% higher in October from September.
• The Dow Futures suggest a 21 point gain on Wall Street tonight.

MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.

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